Daily FX Trading Update: NZ Dairy Prices Rebound – Aug 19, 2015

Daily FX Trading Update: NZ Dairy Prices Rebound - Aug 19, 2015

The US dollar had a mixed performance as it functioned as a counter currency in recent trading sessions. Traders are probably reducing their positions ahead of the release of the FOMC minutes today, which could provide more clues on when the Fed might hike interest rates. Indications that they’re ready to hike in September could spur gains for the Greenback while cautious comments could push rate hike expectations further and lead to a selloff. US CPI readings are also due today and a 0.2% in the headline reading is eyed.

The euro was in a weak spot in recent trading sessions as the IMF still refused to get on board with the third Greek bailout. With that, Germany signaled that they’re willing to grant debt relief to help the Greek economy meet its budget targets. Note that Greece has a loan payment due to the ECB tomorrow and a higher chance of meeting this obligation could mean gains for the euro. Only the euro zone current account balance is due today.

The pound enjoyed strong gains after the UK CPI figures came in better than expected. Headline inflation landed back at 0.1% instead of holding steady at the projected flat reading while the core version of the report improved from 0.8% to 1.2%. Producer prices showed a 0.9% decline, half the projected 1.8% tumble, but house price inflation came in slightly weaker than expected. There are no reports due from the UK today.

The lack of data from Switzerland kept the franc in tight consolidation against the US dollar, possibly because traders are waiting for the FOMC minutes to be released and for the Greek bailout to fall through. There are still no reports due from Switzerland today but US and euro zone updates could push USDCHF around.

The yen advanced against most of its peers as risk appetite was weak yesterday. Earlier today, Japan reported a weaker than expected trade balance, showing a deficit of 0.37T JPY versus the projected 0.18T JPY shortfall. This suggests that exports have really weakened and that production could see a downturn later on. No other reports are lined up from Japan today, leaving risk sentiment at the helm.

Commodity Currencies (AUD, NZD, CAD)
The Kiwi enjoyed a bit of volatility in the past few hours, thanks to the Global Dairy Trade auction and the quarterly PPI release. Dairy prices saw a 14.8% gain in the latest auction but this wasn’t enough to erase the declines seen in the past few month. PPI readings were also slightly better than expected but not enough to convince traders that New Zealand could withstand another fall in commodities. There are no other reports due from the comdoll economies but the US crude oil inventories report might affect oil prices and the Loonie.

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.