Daily Financial Markets Update: Bracing for Central Bank Statements – Apr 26, 2016

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Daily Financial Markets Update: Bracing for Central Bank Statements - Apr 26, 2016

After Friday’s volatile price action, trading among dollar pairs was subdued at the start of this week with traders reducing their exposure to the upcoming FOMC statement. EURUSD popped up to the 1.1275 area before moving sideways, USDJPY is testing support at the 110.00 major psychological mark, USDCHF retreated upon testing the resistance at .9800, and GBPUSD is stalling around the top of its range at 1.4500.

Data from the US economy came in weaker than expected, as new home sales fell from 519K to 511K versus the projected climb to 521K. US durable goods orders data is due today and a 1.9% rebound in the headline figure is eyed. Also lined up are the CB consumer confidence index, flash services PMI, and Richmond manufacturing index.

GBP holds on to gains on anti-Brexit talks

The pound was able to stand its ground in recent sessions, as UK citizens might be convinced to vote for staying in the European Union in the upcoming referendum. Top officials such as UK Chancellor Osborne and US President Obama have cautioned against the risks of a Brexit, reiterating that it would be more advantageous for the UK to stick to the status quo.

GBPJPY pushed past the 160.00 barrier and is consolidating around 161.00, EURGBP broke below the .7800 level and is back down to .7750, GBPAUD is attempting to break past the resistance at 1.8800, and GBPNZD is currently trading around the 2.1100 area.

Yen recovers after sharp Friday selloff

The Japanese yen regained its footing after losing a lot of ground to its forex counterparts on Friday. Back then rumors that senior BOJ officials might push for negative lending rates in order to complement negative deposit rates spurred yen weakness ahead of this week’s rate statement.

On Monday, Japanese Prime Minister Abe shared his plan to create an additional budget for earthquake rebuilding efforts, reducing the need for the central bank to dole out more stimulus. EURJPY retreated from the resistance at 125.00, AUDJPY is back down to the 85.50 area, NZDJPY is holding steady around 76.25, and CADJPY is testing 87.50 once more.

Other event risks this week include the upcoming RBNZ interest rate decision, as several market participants are still counting on the central bank to lower rates by 0.25% again. The US advanced GDP reading is up for release later on in the week.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.