EUROPEAN session review: sterling hits 8-month high

Data released: 

08:30 GMT UK Bank of England Minutes 

09:00 GMT EMU Construction Output w.d.a (YoY) (Jul) -1.2% _-3.0% 

09:00 GMT EMU Construction Output s.a (MoM) (Jul) 0.3% _ 0.7% 

09:00 GMT Switzerland ZEW Survey - Expectations (Sep) 16.3 20.0 7.2 

The hawkish tone from the BoE minutes gave further impulse to the pound after the MPC members are not seeing any need for extra stimulus in the UK economy at the present, voting 9-0 in favour of leaving the status quo. The other important point argued by the central bank was the higher UK yields, saying that they were following developments in the US economy and acted as a response to positive results in the domestic economy. 

EURO 

The single currency is extending the consolidation pre-FOMC meeting. 

EUR/USD remains below Monday’s highs on $1.3380 (initial resistance). Strong resistance comes at $1.3400 (Aug 23 highs) with a break above targets $1.3450 (Aug 20 high). Initial support remains at $1.3330/20 (last week’s highs and channel line from Sep 6). Below losses may widen to $1.3250 (Sep 13 lows). 

POUND 

The pound rose to an eight-month high versus the dollar as Bank of England minutes showed policy makers voted unanimously to keep policy unchanged this month. 

Sterling strengthened for a fourth day as the minutes of the Sept. 3-4 meeting showed “no member judged that further stimulus was appropriate at present.” The minutes also showed the panel voted 9-0 to keep the bond-purchase program at 375 billion pounds ($599 billion). 

GBP/USD rose to $1.5980. Above resistance comes at $1.6080. Initial support is around $1.5900/$1.5890 (channel line from Sep 6) and $1.5780 (Friday’s lows). 

YEN 

The yen is still within the range. 

USD/JPY holds above strong support comes at Y98.60 (channel line from Aug 28) with a break under support is around Y97.80 (earlier broken channel line from Jul 7). Minor resistance placed at Y100.00 (Friday’s highs) and Y100.60 (Sep 11 highs). 

DATA PREVIEW: 

At 12:30 GMT US give Aug Building Permits and Housing Starts with 0.950M and 

0.913M expected respectively. 

At 14:30 GMT EIA Crude Oil Stocks change (Sep 13) may weight on oil prices. 

At 14:40 GMT BoC Governor Poloz speaks. 

But the main focus of the day will be on Fed Interest Rate Decision at 18:00 GMT with 0.25% expected. 

At 18:30 GMT Fed's Monetary Policy Statement and press conference come. 

At 22:45 GMT New Zealand reports Q2 Gross Domestic Product and at 23:50 GMT Japan brings Aug Trade Balance data.

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