Fundamental Analysis: Forex Trading Review – May 8, 2014

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Fundamental Analysis: Forex Trading Review - May 8, 2014

Fundamental Analysis: Forex Trading Review - May 8, 2014

The US dollar regained ground to most of its major counterparts in recent forex trading review sessions, as risk appetite waned. Not even Yellen’s relatively cautious speech was enough to force the dollar to retreat. The Fed head retracted her six-month rate hike forecast after asset purchases end, as she noted that there are still plenty of challenges facing the US economy. Preliminary non-farm productivity and unit labor costs both came in stronger than expected though. Initial jobless claims are up for release today, along with another testimony by Yellen.

The New Zealand dollar posted massive losses yesterday when RBNZ Governor Wheeler warned that the central bank is ready to intervene if the Kiwi keeps rallying and winds up hurting inflation and exports. Recall that the latest dairy auction showed a decline in prices, which means that the Kiwi might be partly to blame for industry weakness. In Australia, the jobs report came in much better than expected with a 14.2K increase in hiring that allowed the jobless rate to hold steady at 5.8%. Canadian housing starts data is up for release later today.

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Forex Trading Review of Major Currencies

The euro edged slightly lower to the US dollar and Japanese yen in the latest forex trading review sessions when data from the euro zone came in below expectations. German factory orders slipped by 2.8% while French industrial production made a 0.7% decline. The main event for today is the ECB interest rate decision, with the central bank keeping interest rates unchanged for the meantime. Traders are still waiting for the press conference to hear what the ECB plans to do next.

The pound retreated upon hitting the minor psychological resistance of 1.6950 to the US dollar, as the lack of data from the UK kept the bulls at bay. For today, the BOE interest rate decision is scheduled and this might push the pound back in rally mode if the remarks are dovish. Take note though that traders might opt to wait for the minutes of the monetary policy meeting to get more clues on future BOE moves.

To contact the reporter of the story: James Brennan at james@forexminute.com