Fundamental Analysis Forex Trading Review – May 21, 2014

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Fundamental Analysis Forex Trading Review - May 21, 2014

The latest forex trading review shows that US dollar drew support from risk aversion in yesterday’s trading sessions, as the declaration of martial law in Thailand brought geopolitical risk back in the mix.

There were no reports released from the US economy but a few Fed officials gave speeches, providing a preview of how the upcoming FOMC minutes release might turn out. So far, the views have been mixed, with some supporting an earlier than expected rate hike and others suggesting that stimulus must be maintained. The FOMC minutes might contain nothing new, but traders are waiting for the actual speech by Fed head Yellen to see what the Fed has planned.

The euro erased some of its recent gains when German PPI printed weaker than expected results. Producer prices are down 0.1% in the euro zone’s largest economy, reviving fears of deflation in the region and leading to more calls of further easing next month. Only the euro zone current account and consumer confidence data are up for release today and these aren’t expected to have a huge impact on euro movement.

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Forex Trading Review

Risk aversion got the better of the comdolls in recent forex trading review, causing the Aussie, Kiwi, and Loonie to break below key technical levels against the dollar and the yen. Dovish RBA minutes and the Australian budget cuts weighed on the Aussie the most, pushing AUD/USD below the .9300 mark. Westpac consumer sentiment showed a 6.8% decline in Australia, leading to more losses for the currency. No other reports are lined up from the comdoll economies today.

The pound recovered to its counterparts when UK CPI churned out stronger than expected results. The headline figure climbed from 1.6% to 1.8%, outpacing the consensus at 1.7%, while the core figure showed a 2.0% gain versus the estimated 1.8% increase in price levels. Today, the BOE will release the minutes of its latest monetary policy meeting and reveal whether they are still holding on to their rate hike bias or not. Recall that the previous forex trading review indicated that BOE inflation report turned out to be a bit dovish and the minutes of their latest policy meeting might have the same tone.

The yen advanced against most of its major counterparts when risk aversion returned to the markets in yesterday’s forex trading review. Traders don’t expect the BOJ to make any actual monetary policy changes today since Japan’s economic reports have been mostly strong so far. Of course this excludes the effect of the recent sales tax hike and data including this change might have more impact on yen direction.

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.