EUR/USD, USD/JPY, NOK Flows: Tech and oil still churn; uncertain Fed key focus
Market unusually uncertain into Fed, so plenty of scope to react
USD/JPY seeing (very minor) weight as Nikkei stays dragged into mth-end
Oil breaks correction on latest proxy flare up
A similar background story prevailing into today. Majors tending to be kept in check waiting for the FOMC to play out. The market has around 30% hike priced in as a big hedge for this meeting, so there is definitive nervousness that patience runs out. Such unclear pricing on Fed day (partly symptom of no forward guidance and partly the divided, uncertain Fed stance) suggests plenty of potential to react later
Nonetheless, 1.14~ is still proving quite magnetic on EUR/USD with the pair back to that figure. Oil has also arrested its pullback, up $3 on concerns over US-Saudi strikes on Iran-backed groups in Iraq, while Iran also rejects Oman’s proposals for regional management of the Strait.
Otherwise, the tech crunch continues with Kospi off around 8%. It looks to be rapidly diving for the 50% retracement and Mar-Apr lows in the 4900-5000~ area. Nasdaq also -0.6% into earnings, though that is still within yesterday’s low.
Perhaps more importantly, the Nikkei also pulling lower too and that underperformance is seeming to play to a little, if very minor, weight on USD/JPY, still something to watch through the completion of month-end.