Forex Trading Review: FOMC Minutes Fail to Spark USD Rally – May 22, 2014

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Forex Trading Review: FOMC Minutes Fail to Spark USD Rally - May 22, 2014

The latest forex trading review of fundamentals shows that the US dollar barely reacted to the minutes of the latest FOMC meeting, as the report revealed nothing new. Policymakers mentioned that they are not very concerned about accommodative monetary policy stoking inflationary pressures at the moment, as the CPI remains below the Fed’s 2% inflation target. However, they did start looking into gradual exit strategies involving short-term interest rates. The main takeaway from the minutes of the meeting is that the Fed is starting to consider how to slowly tighten monetary policy without shocking the markets. US existing home sales, initial jobless claims, and flash manufacturing PMI are due today.

The euro lost ground to the dollar again when the euro zone current account balance turned out weaker than expected at a surplus of 18.8 billion EUR instead of the estimated 24.2 billion EUR. German and French PMIs are up for release today and this might dictate whether the euro is in for a deeper selloff or not. Small downticks are expected for the manufacturing and services sectors of both economies, which would reflect a slower expansion in these industries.

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Forex Trading Review and Outlook

The pound continued its ascent to the dollar in recent forex trading review sessions when UK retail sales data showed stronger than expected results. A 1.3% increase was seen, higher than the projected 0.4% uptick, while the previous month’s reading enjoyed an upgrade. UK’s revised GDP figure is up for release today and an upward revision from the previously reported 0.8% reading might lead to more gains for the pound.

The yen gave back its recent gains when risk appetite returned to the markets. The BOJ made no changes to monetary policy as expected but provided an upbeat outlook for capital expenditures. Earlier today, the freshly released Japanese manufacturing PMI showed an increase from 49.4 to 49.9, just a notch away from indicating industry expansion. No other reports are due from Japan today.

The comdolls recovered off their declines in recent forex trading review sessions when risk sentiment improved. Data from Australia actually showed weakness in the consumer sector while New Zealand’s credit card spending report reflected a slowdown. For today, Canadian retail sales data are due and might come in weak thanks to the recent drop in hiring.

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.