Daily FX Trading Update: FOMC Minutes Turn Out Less Hawkish – Feb 19, 2015

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Daily FX Trading Update: FOMC Minutes Turn Out Less Hawkish - Feb 19, 2015

The US dollar had a sharp FX trading selloff after the minutes of the latest FOMC meeting were released. As it turns out, the report was less hawkish than expected, as some policymakers expressed concerns about hiking rates too soon. The minutes also indicated that the Fed is worried about external risks stemming from the downturn in China, the financial uncertainty in Greece, and the tensions in the Middle East and Ukraine. Data from the US was also mostly weaker than expected, as PPI figures and data on building permits missed expectations. The US Philly Fed index is up for release today and an improvement from 6.3 to 8.8 is expected.

The euro managed to advance against the dollar but it was still in a weak spot compared to its other FX trading counterparts. Rumors that the Greek government would pursue a 6-month loan extension lifted the shared currency for a while but the EU said that no proposal has been passed. Only medium-tier reports are due from the euro zone today, leaving market participants to focus on the ECB meeting minutes and any developments on the Greek debt situation.

FX Trading News

The pound managed to extend its recent FX trading gains when the UK posted another set of stronger than expected jobs data. Claimant count dropped by 38.6K in January, better than the estimated 25.2K drop in joblessness. This pushed the jobless rate down from 5.8% to 5.7% while average earnings improved from 1.8% to 2.1%. Meanwhile, the BOE minutes revealed a unanimous vote to keep interest rates and asset purchases unchanged. Only the CBI industrial orders expectations report is up for release today.

The franc saw a bit of FX trading action against the dollar while continuing to move gradually lower against the euro and the pound. Swiss ZEW economic expectations tumbled from -10.8 to -73.0, indicating that pessimism has worsened. The Swiss trade balance is up for release today and a smaller surplus is eyed.

The Japanese yen advanced against most of its major FX trading counterparts when the BOJ refrained from announcing any monetary policy changes. Governor Kuroda even upgraded their assessment and outlook for exports and output, reminding market participants that the Japanese economy continues to recover. Earlier today, Japan’s trade balance marked a smaller than expected deficit.

The comdolls chalked up small gains to the dollar in recent trading but the Kiwi erased some of its wins when the PPI figures came in mixed. Producer input prices showed a worse than expected 0.4% drop while output prices marked a smaller than expected 0.1% decline. There are no reports lined up from the comdoll economies today.

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.