Daily FX Trading Update: FOMC in No Rush to Hike Before April – Jan 8, 2015

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Daily FX Trading Update: FOMC in No Rush to Hike Before April - Jan 8, 2015

The US dollar had a mixed FX trading performance following the release of the FOMC minutes, although the safe-haven currency generally ended stronger. The minutes showed that the US central bank is in no rush to tighten monetary policy but is pleased with the improvements in the domestic policy. In particular, Yellen mentioned that they are unlikely to hike rates before April as inflationary pressures are weakening. For today, only the initial jobless claims report is due and it might show a 291K figure.

The euro continued its slide to its major FX trading counterparts, as inflation figures from the euro zone came in mixed. The headline figure marked a 0.2% drop, worse than the estimated flat reading while the core figure indicated a 0.8% gain, stronger than the projected 0.6% uptick. German retail sales came in stronger than expected with a 1.0% gain while the unemployment change report showed a better than expected 27K drop in joblessness. Euro zone retail sales is due today and a 0.3% uptick is eyed.

FX Trading Fundamentals

The pound slid to the dollar and the yen in yesterday’s FX trading sessions, even though there were no major reports released from the UK. For today, the BOE interest rate statement is due and no monetary policy changes are expected. Traders are keen to determine if there are any notable changes in policy bias, as the BOE appears to have shifted to a more dovish tone recently. Unless there are any surprises though, pound traders might wait for the minutes of the meeting to be released before taking large positions.

The franc continued to edge lower to the dollar in recent FX trading as the SNB reported a higher foreign currency reserves reading. No other reports are lined up for Switzerland today, which suggests that the franc could be sensitive to risk sentiment.

The yen was stronger against most of its FX trading counterparts, except for the US dollar, as risk aversion remained in the financial markets yesterday. There were no reports released from Japan then and none are due today, leaving yen pairs vulnerable to market sentiment.

The comdolls managed to advance against the dollar, despite the recent dip in oil prices to new lows. Australia reported a 7.5% increase in building approvals instead of the projected 2.7% drop while Canada saw a stronger than expected Ivey PMI. The manufacturing index dipped from 56.9 to 55.4, higher than the estimated drop to 52.3. New Zealand building consents data is due later on.

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.