Forex today: Fed's after-glow leaves dollar heavy, resisted at 50% Fibo retracement of post FOMC statement decline

• Forex today was a follow-through of the FOMC outcome of which confirmed the market's foresight which predicts that the Fed would be switching back to neutral. 

As a result, the greenback was initially on the backfoot and US yields were extending their decline, (The US 10-year yield fell 4bp to 2.63%). However, the dollar did manage to pick up a last-minute bid for the month, moving up into the 95.50s in a 50% Fibo retracement of the Fed decline. 

Elsewhere, equities were ending the month on a high, although the DJIA was finding tough resistance marked by key confluences on the charts and dragged down (-0.2%) by a 8½% fall in DowDuPont after a profit warning based on weaker sales in a familiar culprit being China and also in Europe. Nevertheless, it completed its best performance for the month of January in decades. 

Currency action

Analysts at Westpac broke down the key currency action in the G10s:

"Underperformer EUR/USD fell from 1.1515 to 1.1445, still 20 pips above pre-FOMC levels. GBP/USD consolidated its Fed-driven gains around 1.3110, up about 0.3% overall. USD/JPY followed US yields lower to 108.50 but then recovered partially, to 108.85.

Outperformers AUD and NZD extended gains before consolidating. AUD/USD rose as far as 0.7295, a high since 5 December, before easing to 0.7265 in late NY. Spot iron ore added 0.4% to the steep gains earlier in the week, to $84.30/tonne, another high since March 2017. The kiwi high was 0.6939, steadying around 0.6910. AUD/NZD ranged sideways, mostly between 1.0505 and 1.0530."

Key notes from overnight:

• China and U.S. trade talks summary and sound bites from two day discussions in Washington
• DJIA stuck at key resistance and confluence level, but enjoys best January since 1989

Key events ahead:

There are only low key data releases due globally ahead of the US Jan employment report.  However, the Caixin China manufacturing PMI (12:45pm Syd/9:45am local, f/c 49.6) is one to watch. Trade headlines could also be fired off in various wires and press reports from China today.