FTSE 100 FALLS FOR THREE STRAIGHT DAYS AHEAD OF FOMC DECISION

The Aussie attempted to bounce back after the relatively mixed economic data from Australia. According to Markit, the country’s service PMI, which accounts for the biggest part of the economy, rose from 45.5 in September to 51.8 in October. This was a sign that the country’s economy was doing relatively well as the country starts to reopen. In the same period, the construction index rose from 53.3 to 57.6. Meanwhile, the number of building approvals declined by 4.3% in September while private house approvals declined by about 16%. These numbers came a day after the Federal Reserve delivered a relatively hawkish interest rate decision.

The New Zealand dollar held steady as the market reacted to the relatively strong employment numbers. According to the country’s statistics office, the unemployment rate declined from 4.0% in the second quarter to about 3.4% in Q3. This performance happened even as the country went into a lockdown in the third quarter as the number of Covid cases rose. Meanwhile, the labour participation rate rose from 70.50% in Q2 to 71.20% in the third quarter. Wages, as measured by the labour cost index also rose by 2.5%. These numbers show that the country’s economy is doing well even as the RBNZ starts tightening its policies.

The British pound remained under pressure even after the relatively strong economic data from the United Kingdom. Data by Nationwide showed that the country’s home price index (HPI) rose by 9.9% in October on a YoY basis. Prices rose from 0.2% to 0.7% on a month-on-month basis. As such, there are signs that the housing market is still steady even as prices remain at elevated levels. Additional data by Markit revealed that the services sector is doing relatively well. The services PMI rose from 55.4 to 59.1 while the composite PMI rose to 57.8. These numbers came a day ahead of the BOE interest rate decision.

GBPUSD

The GBPUSD pair declined as investors waited for the BOE and Fed decisions. It is trading at 1.3623, which is slightly above the key support level at 1.3600. On the four-hour chart, the price is slightly above the lowest level since October 13th. It has also moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, while the trend looks bearish, there is a likelihood that the pair will rebound ahead of, or after, the Fed decision.

EURUSD

The EURUSD pair rose to a high of 1.1595 as traders waited for the Fed decision. On the hourly chart, this price is still in the range where it was on Tuesday. It has moved above the 38.2% Fibonacci retracement level while the MACD has moved slightly above the neutral level. Therefore, the outlook of the pair is neutral with a bearish bias. This means that the pair will likely bounce back lower after the Fed decision.

UK100

The FTSE 100 remained under pressure on Wednesday as investors waited for the upcoming Fed decision. The index has declined in the past three consecutive days. It has moved below the 25-day moving average and is currently approaching the 23.6% Fibonacci retracement level. The RSI has also turned lower. Therefore, the index will likely maintain its bearish trend in the near term.