EUR/USD:1.3130/32: Yesterday, we sold 40% of equity on a spike to 1.3155 and profit on the same was taken at 1.3119. Today we may again chance 40% of equity at 1.3145-50 with a 40 pip stop for a 40-50 pip down move.

GBP/USD:1.9531/33: Shorts from 1.9575 were undertaken as planned and the same were exited yesterday at 1.9490. Today we would like to sell the GBP close to 1.9550-60 and if done, keep a 40 pip stop for a 80-100 dip again.

USD/CHF:1.2385/88: The longs from 1.2350, for 50% of equity were exited at 1.2410. Today we would like to buy the Dollar close to 1.2445-55 with a 50 pip stop for a 50-60 pip upmove.

USD/JPY121.01/04: The 119.30 longs were exited yesterday at 121.00 as planned. Now we shall wait for a dip close to 120.80-85 levels to buy the Dollar again. If done, keep a 35 pip stop for a move to 121.50-70.

EUR/JPY:158.91/93: We would stand aside for a while before taking a call again.

US consumer prices were slightly better than expected today which helped to contribute to the overall strength of the US dollar. Having rallied going into the release of the CPI report, the true impact on the dollar was limited. Central banks were the focus of the day with interest rate decisions, comments and minutes from prior meetings occupying the calendar. The minutes from the January FOMC meeting delivered no surprises. The Federal Reserve was relatively upbeat about growth and agreed that inflation risks still remain. Even though another rate hike was “not warranted” at the time, they decided against dropping the tightening bias. The tone of the statement contained the same degree of hawkishness as the comments made by Fed Chairman Bernanke last week, which should keep the prospects of a rate hike later this year in play.
Elsewhere, the Pound lost some ground against the US dollar after the release of the minutes from the most recent monetary policy meeting. The committee voted 7 to 2 to leave interest rates unchanged at 5.25 percent.
Once again, Besley and Sentence who are typically categorized as hawks voted in favor of an interest rate hike. However the other members of the monetary policy committee voted against one because they felt concerned about delivering rate hikes that were too closely spaced together. They wanted to give the economy time to absorb the latest rate hikes and also wanted to avoid over tightening. The take away message is that the BoE has adopted a wait and see approach like the Fed and will not be raising interest rates in March or April. Meanwhile, the Yen dropped through the floor today despite an interest rate hike from the Bank of Japan. As we suggested yesterday, regardless of how the BoJ swings, the yen may not rally on the back of the rate decision. This was how things unfolded over the last 12 hours as cautious comments from the Bank of Japan reinforced the market’s belief that despite the increase, interest rates will remain low and any further rate hikes will be delivered gradually.At the other end, comments from the central bank governors of Australia and
Switzerland indicate that both policy makers are looking to lift interest rates over the next year.