Sterling finds itself under tremendous selling pressure following release of lower-than-anticipated headline and core CPI readings from the UK. This development is seen as a favorable turn of events for BoE policymakers, solidifying the anticipation that the rate hike expected to be announced tomorrow may be the last in the current cycle. On the heels of the Pound, Canadian Dollar emerged as the second weakest, failing to sustain the momentum gained from yesterday's surge, which was propelled by robust Canadian inflation data. Meanwhile, Yen trails closely as the third weakest, with traders maintaining a cautious stance in the lead-up to BoJ decision slated for Friday. In contrast, Dollar, Euro, Swiss Franc, and Australian Dollar are exhibiting stability, with their trading ranges tightly bound against one another. Market attention is shifting towards Fed's rate decision due later today. The new economic projections and the dot plot are expected to be the focal points of this announcement, giving investors critical insights into Fed policymakers' perspective on economic conditions and potential policy actions. Moreover, there has been a notable surge in US Treasury yields on the long end overnight, signalling the potential for further rallies should there be any hawkish surprises from Fed today. From a technical standpoint, Sterling's downturn today does not spell disaster yet. Despite the day's rally, EUR/GBP is still capped well below near-term resistance of 0.8700, maintaining neutral outlook at best for now. However, decisive break of 0.8700 will be a strong sign of medium bullish reversal, which would set up rally back towards 0.8977 resistance later in the rest of the year. BoE's decision tomorrow stands as a pivotal moment in determining the forthcoming trends. In Asia, Nikkei closed down -0.66%. Hong Kong HSI is down -0.51%. China Shanghai SSE is down -0.51%. Singapore Strait Times is down -0.10%. Japan 10-year JGB yield rose 0.0054 to 0.724. Overnight, DOW dropped -0.31%. S&P 500 dropped -0.22%. NASDAQ dropped -0.23%. 10-year yield rose 0.046 to 4.365. |
