[MARKET ANALYSIS] G10s quiet after mostly gaining post-FOMC; BoE ahead
- G10s are mostly weaker against the Buck. Antipodeans outperform, European EMs benefit from softer TTF and other majors are quiet.
- USD is firmer against most G10 peers and resides in a 100.77-101.07 range as it attempts to claw back some FOMC-induced losses from Wednesday. To recap, the treasury curve steepened aggressively, and USD saw broad weakness as markets unwound a c. 33% probability of tightening. The driver today will likely be the PCE and GDP metrics due at 13:30 BST, alongside the familiar geopolitics (which will likely have less of an impact today). Support is below at 100.50 (alongside the 50DMA).
- After gaining against the Buck on Wednesday, EUR is a touch weaker, but off worst levels as the dust settles post-FOMC; the pair currently residing at the top of yesterday's range around 1.1450. German prelim GDP was released alongside State CPIs, the latter which indicates the mainland figure will likely be in line with expectations. German GDP surpassed expectations, before the EZ figure also printed firmer. EUR saw a modest bounce on the German data points, sufficient to lift the pair above 1.1450. EUR will likely be dictated by the Buck once again this afternoon, into tier-1 US data (see above). Levels include the 21DMA below @1.1418, and the 50DMA above at 1.1483.
- Focus for GBP today on the BoE meeting and MPR. The bank is widely expected to keep rates unchanged at 3.75%, justified as the BoE retains policy space and neither the energy or second-round effect criteria are met beyond scenario A. A 7-2 vote split is the consensus, though there is a possibility Mann could also join the hawks. Into the meeting, markets imply just 2bps, or an 8% probability of tightening. Should the hawkish risks materialise, Cable could push towards 21, 50 and 100 DMAs at 1.3380/60/90 respectively.
- Antipodeans are the sole currencies firmer against the Buck, with encouraging Australian Building Approvals and New Zealand Business Confidence likely giving a hand. Kiwi is the outperformer after finding a bid above 0.58, while Aussie fails to benefit to the same extent, but remains supported at 0.6950.
Session wraps of this kind describe the standard post-decision sequence: a crowded positioning unwind on the FOMC, here the pricing out of a tightening tail that steepened the curve and hit the Buck broadly, followed by a partial retracement as the dust settles. That clawback pattern is well established; the first session after a surprise repricing tends to see the dollar recover a fraction of its losses before the next tier-1 release reasserts direction, which is why the afternoon PCE and GDP prints carry more weight than the morning's European data. The EUR read is mechanical in this regime: with no domestic catalyst of consequence, the pair trades as a function of the Buck, and the German and EZ prints moving it only briefly is consistent with that. On the BoE, the informative variables are the vote split and the guidance rather than the hold itself, since a rate decision trading at a single-digit probability of a move prices almost nothing; the risk is asymmetric toward a hawkish dissent widening, and named hawkish members joining the minority has historically been the tell that shifts front-end pricing. The antipodean outperformance on second-tier domestic data is typical of quiet sessions where low conviction flows dominate, and tends not to survive the US data window.