Daily FX Trading Review: BOE Minutes and UK Jobs Due – Sept 17, 2014

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Daily FX Trading Review: BOE Minutes and UK Jobs Due - Sept 17, 2014

The US dollar was unable to advance against most of its FX trading counterparts in yesterday’s trading sessions, as traders eased off their long positions ahead of today’s FOMC statement. While the Fed is expected to carry on with its taper of $10 billion and acknowledge the recent improvements in the economy, Chairperson Yellen might adopt a cautious stance in reiterating that rates will not be hiked until the recovery is sustained. Data from the US economy was weak yesterday, with the headline PPI staying flat instead of posting the estimated 0.1% gain and TIC long-term purchases posting a surprise negative reading.

The euro edged slightly higher to the dollar but was unable to break past the 1.3000 handle, as FX trading sentiment for the shared currency remained mostly bearish. German ZEW economic sentiment came in stronger than expected at 6.9, but this still marks a considerable decline from the previous 8.6 reading. Meanwhile, the euro zone ZEW slipped from 23.7 to 14.2, worse than the estimated 21.3 figure. Euro zone final CPI readings are due today and no changes are expected.

FX Trading Fundamentals

The pound had a volatile FX trading day as it broke below 1.6200 to the dollar only to recover to 1.6300 later on. CPI readings came in mostly in line with expectations, as the headline figure fell from 1.6% to 1.5% while the core figure improved to 1.9%. PPI input prices marked a 0.6% decline while the retail price index showed a weaker than expected 2.4% reading, suggesting that price pressures are still weak in the country. BOE minutes and the UK jobs release could add volatility to pound movement today, with an expected 2-7 vote to hike rates and a potential 29.7K drop in joblessness.

The franc continued to move carefully against its FX trading counterparts as traders start to price in potential easing or intervention from the SNB tomorrow. There have been no reports released from Switzerland yesterday, but SNB officials have been hinting at the possibility of negative deposit rates.

The yen was back in its weak state yesterday, as it sold off to most of its major FX trading counterparts except for the US dollar. BOJ Governor Kuroda refrained from announcing big policy changes, as he stressed that the economy could recover and that no easing measures are needed for now. There are no reports due from Japan today, which leaves yen pairs sensitive to risk sentiment.

The comdolls recovered slightly in recent FX trading, with AUDUSD and AUDJPY edging higher. The RBA minutes stressed that policymakers are not looking to cut rates soon as they are getting concerned about stronger house price inflation. In Canada, manufacturing sales came in better than expected at a 2.5% increase and an upward revision in the previous figure. New Zealand’s current account balance came in as expected at a deficit of 1.07 billion NZD, lower than the previous 1.47 billion NZD shortfall. The country will release its quarterly GDP report in the next Asian trading session.

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.