Daily FX Trading Review: NZD Hit by Weak Growth Estimates – Aug 19, 2014

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Daily FX Trading Review: NZD Hit by Weak Growth Estimates - Aug 19, 2014

The comdolls had a mixed FX trading performance, as the Kiwi suffered a sharp selloff in the early Asian trading session while the Aussie enjoyed gains. Bleak growth forecasts from the New Zealand government drove the Kiwi lower as traders also anticipated more weakness from the dairy auction later on. As for the Australian dollar, the less dovish than expected RBA meeting minutes kept the currency afloat against most of its counterparts. There are no other reports due from the comdoll economies today.

The US dollar outpaced its major FX trading counterparts in yesterday’s trading session as risk aversion extended its stay and traders positioned themselves ahead of the Jackson Hole symposium. Medium-tier data from the US was better than expected, as the NAHB housing price index climbed from 53 to 55 instead of just holding at 53 as expected. For today, US headline and core CPI are due and these are expected to show a 0.1% and 0.2% gain respectively. Housing starts data is also up for release and a huge climb from 0.89M to 0.97M is projected.

FX Trading Fundamental Analysis

The euro gave up a lot of ground to the dollar in recent FX trading, as the euro zone trade balance came in weaker than expected. The surplus narrowed from 15.2B EUR to 13.8B EUR, far below the estimate at 14.9B EUR. This suggests that the trade sector is already weak and that it might crumble under the food import sanctions imposed by Russia. Only the euro zone current account balance is up for release today and it might show a smaller surplus of 19.3B EUR from the previous 19.5B EUR.

The pound was stuck in consolidation in recent FX trading as there were no major reports to provide any direction. For today, UK CPI is up for release and a decline is expected from 1.9% to 1.8% in the headline figure. The core figure is likely to dip from 2.0% to 1.9%. Weaker than expected data could lead to a sharp selloff for the pound as it would indicate that the economic slack is starting to weigh on price levels.

The franc lost ground to the dollar since the currency simply took its cue from the euro. There were no reports released from Switzerland yesterday and there are none due today, suggesting that a bit of FX trading consolidation might be in the cards. Risk sentiment could also play a stronger role in driving franc pairs around today.

The yen was still in a weak spot even though there were no reports released from Japan recently. There are still no reports lined up from Japan today which means that yen pairs could keep following market sentiment, with a pickup in risk appetite likely to push the Japanese currency lower in FX trading.

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.