Dollar Stronger Ahead Of FOMC Minutes

• The dollar was stronger against almost all currencies from its opening levels at midday in Europe Wednesday as investors look forward to the minutes from the FOMC’s July meeting. In our view, the minutes are likely to clarify the reasoning behind the Committee’s decision to begin tapering off QE in September. That’s likely to support the dollar. NOK continued to be the worst-performing G10 currency in a continuing reaction to yesterday’s worse-than-expected GDP figure. SEK was dragged down along with it although there was no particular news out about Sweden.

• Among G10 currencies, only the pound gained slightly on the dollar after it was announced that public sector net borrowing in July was much less than expected (GBP 1.6bn vs expected GBP 5.0bn). IDR was one of the few EM currencies to gain vs USD this morning. IDR had been the biggest loser vs USD overnight (-2.4%) but gained back 2% during European trading as Indonesian stocks rose for the first time in five days.

• USD/SEK moved higher during the last hours’ trading activity, breaking above the 6.5056 (S1) support level (previous resistance). The pair has been moving sideways for the last several trading days in a trading range between the 6.4701 (S2) and 6.5339 (R1) boundaries and a clear break out of one of them should determine the next trending direction. Both the Stochastic and RSI’s readings just exited overbought conditions, and we believe that the price will stay within the range for the next several hours. On the longer time frame (daily chart) the USD/SEK is moving in an uptrend that has provided strong support to the pair since February.

• Support: Support is found at the 6.5056 (S1) and 6.4701 (S2), followed by the 6.4396 (S3) found from the daily chart.

• Resistance: Resistance levels are at 6.5339 (R1), 6.5675 (R2) and 6.5941 (R1)
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