US session review: US dollar extend its gains after FOMC minutes

Data released: 

14:30 US USD EIA Crude Oil Stocks change (Oct 4) 1 6.807M 0.900M 5.472M 

18:00 US USD FOMC Minutes

FOMC Minutes show most on Fed see taper by year-end. Most members of the Federal Reserve still thought that it would be appropriate to scale back its stimulus program this year, even as the central bankers decided to hold off moving in mid-September. A majority of Fed officials arrived at the September meeting still thinking that it would be appropriate to begin tapering the $85 billion bond purchase program this year and end it completely by the middle of 2014. Officials who supported holding steady in September were worried that interest rates might move higher after the decision. Several Fed officials said their decision to hold policy steady in September was a close call.

The main currencies trade with losses on Wednesday, as U.S. politicians remained at loggerheads and market patience began to wear thin. Europe sagged even as expectations that President Barack Obama will nominate Janet Yellen as chairman of the Federal Reservet. 

EURO

The euro fell despite strong EU news amid message about Barack Obama will nominate Janet Yellen today

German Industrial Production rose 1.4% in August, compared with the 1.1% drop in July.

EUR/USD has tested support at $1.3520 (23.6% Fibo of the $1.3100 - $1.3640 rally). Below $1.3460 (Sep 25 low) support is around $1.3400. Above recent highs resistance is near yearly high on $1.3712.

POUND

Cable eased after weak Uk data. The industrial and manufacturing production disappointed investors, contracting at an annual pace of 1.5% and 0.2%, respectively. 

The trade deficit also missed the median, shrinking to £9.625 billion vs. £9.0 billion expected, albeit lower than July’s £9.941 billion. 

GBP/USD has reached support at $1.5920. Initial resistance comes at $1.6120 (Oct 8 high). Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs).

YEN

The yen remains under pressure amid general dollar’s weakness.

USD/JPY recovered to Y97.60 before retreated a bit. Above resistance comes at Y97.80 (earlier broken support line from Jun 13), then - at Y98.70 (last Tuesday’s high). Support comes at Y96.80 (Asian lows), below - at Y96.50 (Monday’s lows) and Y95.80 (Aug 8 lows).

DATA PREVIEW

ECB President Draghi's Speech will start at 22:00 GMT.

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