RBA Decision, UK Services PMI Dominate Online Forex Trading Action – May 6, 2014

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RBA Decision, UK Services PMI Dominate Online Forex Trading Action - May 6, 2014

The US dollar barely reacted to stronger than expected ISM non-manufacturing PMI in the previous online forex trading US session, as the index jumped from 53.1 to 55.2. This surpassed the consensus at 54.3 and indicated a much stronger expansion in the services industry. US trade balance is up for release in today’s US session and might show a smaller trade deficit, which could provide support for the Greenback. Other than that, risk sentiment is expected to be the main driver of forex price movement in the next few hours.

The euro is still stuck in consolidation to most of its major counterparts, as traders sit on the edge of their seats ahead of the ECB interest rate decision later on this week. Euro zone Sentix investor confidence was weaker than expected, as the reading slipped from 14.1 to 12.8 instead of improving to 14.2. EU officials lowered their euro zone growth and inflation forecasts as expected, lending more support to potential easing from the ECB. Spanish unemployment change was much better than expected and so was Spain’s services PMI, lending support to the euro in online forex trading.

The comdolls made small rebounds in recent online forex trading, as NZD/USD edged closer to the .8700 handle while USD/CAD tested 1.0950. Data from Australia and China have been weaker than expected and there were no reports released from Canada or New Zealand. The RBA made no monetary policy changes in their rate statement, as expected. Canadian trade balance and Ivey PMI are up for release in today’s US trading session, with a larger trade surplus and a lower manufacturing PMI expected. New Zealand quarterly employment data is also coming up and weaker hiring figures are expected.

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Online Forex Trading Fundamental Analysis

UK traders return to their desks today from yesterday’s holiday and sparked more online forex trading action for pound pairs. UK services PMI came in stronger than expected at 58.7 versus the 57.9 consensus and the previous 57.6 reading, pushing GBP/USD past the 1.6900 mark.

The franc was stuck in consolidation to the dollar during the recent online forex trading sessions, thanks to the lack of catalysts from Switzerland, but benefitted from the strong London session open. There are still no reports lined up for today, which suggests that more sideways movement might be seen. Traders could wait for Yellen’s speech in Congress tomorrow before deciding on the longer-term direction for USD/CHF.

Meanwhile, the Japanese yen erased most of its recent gains in yesterday’s trading sessions as risk appetite picked up in the markets. Japanese traders were on holiday then and are still on holiday today, which suggests that overall market sentiment could be responsible for the yen’s price movement again.

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.