What position will Yellen take on the key interest rate?

Fundamentals

Yesterday unemployment reports for the Eurozone in general and Italy in particular were published. The unemployment rate in Europe remains unchanged at 9.5%. Italy’s data were even weaker: unemployment is rising and the rate is now 11.7%.
Today ADP will release its jobs report in the United States. Traditionally the data come out 2 days before Non-Farm Payrolls are reported. The number of new jobs is expected to decrease to 178,000. The information will be published at 12:15 pm GMT.
At 6:00 pm GMT the Fed’s FOMC will decide on the key interest rate. Yellen is expected to leave it along for now, preferring to take a hawkish position at the Fed’s next meetings, but we’ll see. We’ll be watching the rhetoric and the next steps.
The week should be quite interesting, considering the Non-Farms Payrolls report and speeches by the heads of monetary authorities in various countries.


Stocks

Among major American corporations, ADP and the insurance giant AIG will be reporting on Wednesday. ADP’s profit per share is expected to increase substantially to $1.23. Investors are expecting nothing less from AIG (its EPS is predicted to rise to $1.08).
Facebook also issues its report today. Its EPS is predicted to drop to $1.12.
Facebook’s capitalization continues to increase substantially in NASDAQ trading. Technically, the company’s shares have slipped past the upper Bollinger Band. Note that the RSI is in overbought territory. There are no sell signals as yet but, given the rate at which the asset is growing, they may follow, especially if the company’s report is disappointing.
The US market surged at the end of April on the growth of its major corporations. The Dow Jones Industrials are trading near 21,000, which is sky high. The market has probably already baked in a neutral decision from the FOMC. So, if all of a sudden monetary policy unexpectedly tightens, we’ll immediately see it in the prices of core assets. Conservative traders will perhaps prefer to wait for the Fed’s final decision.

Currency Market

The GBP/JPY pair surged last week. It is now taking a “stroll” along the Bollinger Bands. Note however – on the daily charts the MACD has started to decline, clearly diverging from the price chart. One might therefore reasonably expect that bulls will soon take their profit.
The support is around the 9-day moving average, which is 142.50 yen per pound. Aggressive traders may naturally try to short the pound, but they should not forget the older (weekly) charts.
A buy signal has appeared on the weekly charts for the AUD/CHF pair: the Williams %R has risen and entered normal territory after breaking through the lower boundary line. In addition, the MACD is rising on the daily charts and, by the looks of it, we will soon see the MACD intersecting the signal line. If the pair goes up, the target might be 0.7650, where the upper Bollinger Band is located.

Nikolay Dudchenko, Olymp Trade Analyst

Olymp Trade Review