Daily Forex Review: RBA Minutes Turn Dovish – June 17, 2014

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Daily Forex Review: RBA Minutes Turn Dovish - June 17, 2014

Daily Forex Review: RBA Minutes Turn Dovish - June 17, 2014The Australian dollar gave up a lot of ground when the RBA meeting minutes turned out dovish, indicating that policy might stay accommodative. This dashed hopes of a rate hike for the RBA this year. The Kiwi also followed suit, although the selloff was weaker since the RBNZ is more inclined to hike rates again. Canadian foreign securities purchases data was stronger than expected, providing some support for the Loonie. No other forex review reports are due from the comdoll economies today.

The US dollar regained ground against most of its trading counterparts when most economic reports came in stronger than expected. The Empire State manufacturing index improved from 19.0 to 19.3 instead of dipping to the estimated 15.2 reading. Industrial production came in line with expectations of a 0.6% increase while capacity utilization data showed stronger than expected results. US CPI and housing starts data are due today and another round of good figures might extend the Greenback’s rally.

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The euro paused from its recent recovery as it stalled below the 1.3600 mark to the dollar. Euro zone headline and core CPI came in line with expectations of 0.5% and 0.7% gains respectively. German and euro zone ZEW figures are up for release today and considerable improvements are expected, although this might set the stage up for disappointment. Weaker than expected figures could remind traders that the ECB is still ready to ease further and push the euro back in selloff mode.

The pound rallied against most of its counterparts, driven by positive CPI expectations for today’s release. There have been no reports released yesterday but it appears that traders are already bracing themselves for good UK data this week. CPI could slide from 1.8% to 1.7%, but the housing price inflation figures might draw more attention as strong gains could reinforce Carney’s view that rate hikes might take place earlier than expected.

The franc continued to show signs of weakness, as some market participants are already starting to place their bets for the SNB rate decision later on in the week. Swiss PPI data is due today and a flat reading is expected to follow the previous 0.3% decline. A weaker than expected reading could convince more traders that SNB easing is needed to ward off deflationary pressures.

The Japanese yen lost ground to some of its trading rivals as risk sentiment turned positive recently. There have been no reports released from Japan yesterday and none are due today, but the upcoming BOJ monetary policy meeting minutes in the next Asian trading session could renew yen strength if they show confidence in the economy.

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.