Daily Forex Review: BOE Minutes and RBNZ Decision Coming Up – July 23, 2014

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Daily Forex Review: BOE Minutes and RBNZ Decision Coming Up - July 23, 2014

Price action picked up mostly in favor of the US dollar in recent forex review trading sessions, as EUR/USD headed lower while GBP/USD moved below the 1.7100 mark. Data from the US was mixed as the core CPI printed a mere 0.1% uptick instead of the estimated 0.2% gain while the headline CPI showed a 0.3% increase as expected. The Richmond manufacturing index had better than expected results, as the figure improved from 3 to 7, outpacing the consensus at 5.

The euro edged lower as the EU mulled more sanctions on Russia, with many traders worried that the sanctions could backfire on the euro zone. There were no reports released from the euro zone yesterday as risk sentiment continued to weigh on the shared currency. For today, only the consumer confidence release is lined up and it might show a small gain from -7 to -6.

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Forex Review and Forecasts

The pound continued its retreat against most of its major counterparts as UK data came in mixed. The CBI industrial order expectations figure sank from 11 to 2, lower than the estimated drop to 9. However, the public sector net borrowing data showed a smaller deficit of 9.5 billion GBP than the estimated 10.3 billion GBP reading. The previous month’s report was downgraded to show a larger borrowing figure though. For today, the BOE meeting minutes could be the main driver of pound movement, as traders are waiting to see if policymakers are still hawkish.

The franc gave up more ground to the dollar, as it followed the euro in losing value. It didn’t help that Swiss trade balance was weaker than expected at a surplus of 1.38 billion CHF versus the estimated 2.97 billion CHF surplus and the previous 2.85 billion CHF reading. There are no reports lined up from Switzerland today.

The yen had a mixed performance as it advanced to the euro, consolidated to the pound, then lost ground to the Loonie. There were no major reports released from the Japanese economy yesterday, leaving the yen mostly as a counter currency. Risk sentiment could play a central role in yen movement again today, with no top-tier data due from Japan.

The comdolls gave in to dollar strength yesterday but were quick to recover in today’s Asian trading session. Australia’s CPI figures came in line with expectations, providing strong support for the Aussie. Later on, the RBNZ will announce its rate decision and possibly increase the benchmark rate by another 0.25%, which would lead to more positive carry for NZD/USD. However, the rallies could be subdued if the RBNZ officials emphasize that this might be their last hike for the year.

To contact the reporter of the story: James Brennan at james@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.