Daily FX Trading Update: BOE Decision and FOMC Minutes Due – Jan 7, 2015

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Daily FX Trading Update: BOE Decision and FOMC Minutes Due - Jan 7, 2015

The US dollar gained FX trading support from risk aversion once more, allowing it to advance against the pound and euro. Data from the US was actually weaker than expected, as the ISM non-manufacturing PMI fell from 59.3 to 56.2, reflecting a slower pace of expansion in the services industry. For today, the FOMC minutes are up for release and it might show hawkish remarks from the policymakers. If so, the US dollar could continue to draw support on risk aversion and the increasing possibility of Fed tightening this year.

The euro lost further ground to its FX trading counterparts when speculations of a Greek euro zone exit continued to dominate the newswires. Data from the euro zone was mixed, with Spain reporting a stronger than expected services PMI and Italy showing a weaker than expected reading. For today, the euro zone retail sales report is up for release and it might show a 0.3% increase in consumer spending.

FX Trading Fundamentals

The pound was in a weak FX trading spot recently when the UK showed a lower than expected services PMI reading. The figure fell from 58.6 to 55.8, reflecting a slower expansion in the industry, which contributes a huge part to overall economic growth. For today, the BOE interest rate decision is scheduled and no monetary policy changes are expected. Traders are likely to wait for the minutes of the meeting to be released before taking large positions on pound pairs.

The franc edged lower to most of its FX trading counterparts as the impact of SNB negative deposit rates weighed on the currency. There have been no reports released from Switzerland yesterday and none are due today, leaving the franc sensitive to risk sentiment.

The yen advanced to the dollar and most of its FX trading counterparts recently, as risk aversion extended its stay in the financial markets. There have been no reports released from Japan yesterday and none are due today, which suggests that risk aversion could continue to keep the yen afloat.

The comdolls had a mixed FX trading performance, as the Australian dollar and Canadian dollar caved to risk aversion and falling commodity prices. Meanwhile, the New Zealand dollar managed to see some gains thanks to a pickup in dairy prices during the latest auction. Canadian trade balance and Ivey PMI are up for release later today, with the surplus slated to turn into a 0.2 billion CAD deficit and the manufacturing index likely to fall from 56.9 to 52.3.

To contact the reporter of the story: James Brennan at james@forexminute.com