Daily FX Trading Review: More Action from ECB Needed? – Sept 23, 2014

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Daily FX Trading Review: More Action from ECB Needed? - Sept 23, 2014

The Greenback dominated against most of its major FX trading counterparts, as it advanced to the comdolls but consolidated to the yen. Data from the US was weaker than expected yesterday as existing home sales fell short of expectations with its 5.05M reading instead of the projected climb from 5.14M to 5.21M. Only a few medium-tier reports are due from the US today, namely the flash manufacturing PMI and the Richmond manufacturing index. However, some FOMC members are set to testify and their remarks could contain clues on their policy biases.

The euro was still in a weak spot yesterday, following the weak take-up of the ECB’s targeted long-term refinancing operations. Consumer confidence fell recently, as the euro zone index slipped from -10 to -11. Draghi hinted that more ECB action is possible if the economy fails to take advantage of the recent easing moves. For today, German and French manufacturing and services PMIs are due and weak readings might inspire more FX trading losses for the euro.

FX Trading Fundamentals

The pound struggled to recover in recent FX trading as it edged gradually higher to the dollar and consolidated to the yen. There were no reports released from the UK yesterday while today has only the BBA mortgage approvals report on tap. A small increase from 42.8K to 42.9K is eyed but a stronger than expected result might lead to more gains for the pound.

The franc gave up some ground to the dollar and euro recently, despite the lack of data or events in Switzerland. There are still no reports due form the country today but the increasing likelihood of more ECB easing could continue to weigh on the franc as traders also anticipate action from the SNB.

The yen continued to recover against most of its FX trading counterparts while consolidating to the dollar yesterday. There have been no reports released from Japan then while banks are on holiday today, leaving yen pairs at the mercy of market risk sentiment.

The comdoll gang was still doing poorly recently, despite the lack of reports from Australia, New Zealand and Canada. For today, Canada has the retail sales figures due, with the headline report likely to print a mere 0.4% uptick and the core version to show a 0.1% decline. Chinese HSBC flash manufacturing PMI came in better than expected at 50.5, up from the previous 50.2 reading, indicating a potential industry rebound and positive FX trading prospects for the Australian dollar.

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.