Traders of the dollar pairs are winning back the results of the Fed's December meeting, which was known at the end of the US session on Wednesday. During such periods, it was not recommended to trade dollar pairs due to very possible false price movements. The initial reaction of the market often does not find its confirmation: the pair reversed, disappointing those investors who rushed to open trading deals. It should also be noted that the time gap between the publication of the final communique of the meeting (accompanying statement) and the press conference of Fed Chairman Jerome Powell is 30 minutes. During a press conference, which usually lasts 30-40 minutes, traders' mood can also be diverse – both in favor of the dollar and against it. Traders can only make their verdict after that. Therefore, it was not suggested to trade dollar pairs during that time.
Some cross-pairs are also noteworthy, such as EUR/CHF. At the beginning of December, the European currency depreciated almost irreversibly against the Swiss franc, but the downward impulse has worned out since December 10, which led to the euro's recovery of its lost positions. The fact is that ECB's final meeting for the current year was held that day, during which the members of the regulator did not start pushing down the single currency. ECB's head, Ms. Lagarde, emphasized that the Central Bank does not set the target rate for the euro, so it will not artificially lower its value. After that, the EUR/CHF pair began to show an upward trend, which may strengthen today.
In addition, the meeting of the Swiss Central Bank will be held today. Apparently, the SNB will not show the same "favor" to the exchange rate value of the franc. It should be noted that the US Treasury released its annual report this week, in which Washington alleged that Switzerland was manipulating the currency. The SNB, in turn, denied these accusations, and noted that this US report will not in any case affect the monetary policy of the Central Bank and added that they are prepared for active intervention. A little earlier, the head of the SNB, Thomas Jordan, said that "negative rates and the willingness to conduct currency exchange intervention allow the Central Bank to resist the high rate of the franc."
Usually, meetings of the Swiss Central Bank do not cause strong volatility or any excitement in the market. With rare exceptions, the regulator only repeats what was said earlier, practically without changing its statements. However, the December meeting is likely to affect the exchange rate value of the franc at least against the euro. Therefore, we can consider long positions for this pair with an initial target of 1.0805 (Kijun-sen line at D1, upper limit of the Kumo cloud at H4). The main target in the mid-term is 1.0860, which is the upper line of the BB indicator on the daily chart.
Considering the alternative EUR/CHF options, we can also take a closer look at the AUD/NZD cross-pair. However, trading decisions for this pair can only be made after today's publication of data. During the Asian session on Thursday, data on New Zealand economic growth in the third quarter and key data on the growth of the Australian labor market for November will be released almost simultaneously. According to preliminary forecasts, the unemployment rate in Australia will remain at 7%, while the number of employees will rise by 40 thousand. Here, you should pay attention to the "breakdown" of the indicator – based on the growth of gender and part-time employment. If the overall indicator makes it to the "green" zone, with a significant increase in the full employment component, then the Australian dollar will receive significant support. It will make it even if the unemployment rate comes out at the forecast level.
With regards to the economy of New Zealand, the main indicators are expected to rise after a record decline in the second quarter. The positive dynamics was already been considered in prices, therefore, the main attention will be focused on the pace of the recovery process. According to preliminary forecasts, the volume of GDP will grow by 12.9% in quarterly terms and up to -1.3% in annual terms. However, if these values turn out to be worse than forecasted, NZD will be under pressure. So, the AUD/USD pair will continue its upward trend. In this case, it will be possible to consider longs with the first target of 1.0760 – this is a one and a half month price high, which coincides with the upper limit of the Kumo cloud on the daily time frame.
The material has been provided by InstaForex Company - www.instaforex.com