Daily FX Trading Update: BOC Strikes Cautious Tone, ECB Next

Dollar pairs relaxed in their ranges during the latest US session as medium-tier reports printed stronger than expected results. The JOLTS job openings report showed positive hiring momentum while the Beige Book acknowledged that several districts reported moderate gains in employment and wages. According to FOMC member George, the US economy is nearing full employment. There are no major reports due from the US economy today.
The euro consolidated against most of its peers ahead of today’s ECB interest rate decision, as many are expecting to see additional easing efforts. However, the euro’s reaction could hinge on how aggressive the central bank might be, as less dovish moves could still be accompanied by euro gains. In any case, additional volatility is expected around the time of the statement and press conference.
The pound slumped across the board as manufacturing production missed expectations and BOE Governor Carney admitted that he wouldn’t mind doling out more stimulus. Carney explained that there’s still a lot of uncertainty because of the Brexit, downplaying the recent improvements in the PMI readings. There are no major reports due from the UK today.
The franc squeezed out a few more gains against the dollar and its European counterparts, as the SNB foreign currency reserves report didn’t indicate such a huge rise. The figure was up from 616 billion CHF to 627 billion CHF in August. There are no reports lined up from the Swiss economy today.
The yen continued to advance against its peers as traders reevaluated their short positions after a news agency reported that BOJ officials haven’t come to an agreement on whether they’d increase stimulus later this month or not. This threw cold water on BOJ Governor Kuroda’s dovish remarks earlier in the month, especially since data from Japan hasn’t been too bleak. The final GDP reading for Q2 was upgraded to show 0.2% growth from the initially reported flat reading.
Commodity Currencies (AUD, NZD, CAD)
The comdolls had a mixed performance, as the Kiwi was one of the best performers while the Loonie lagged. Even though the BOC refrained from cutting interest rates, the Canadian currency was notably weaker since the official statement sounded more cautious than usual. Earlier today, Australia reported a better than expected trade balance but was unable to make further headway when China released its August trade numbers. US crude oil inventories are due next.
To contact the reporter of the story: Samuel Rae at samuel@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.