Daily FX Trading: RBNZ Kept Rates Unchanged, Talked Down Kiwi – Sept 11, 2014

Daily FX Trading: RBNZ Kept Rates Unchanged, Talked Down Kiwi - Sept 11, 2014

The comdolls gave up further ground in recent FX trading, as the prospect of geopolitical tension and weaker economic growth weighed on sentiment. Earlier today, Australia reported a better than expected employment report, which showed a 121K increase in hiring for August versus the estimated 10.3K increase. Meanwhile, the RBNZ decided to keep rates on hold at 3.50% as expected while trying to talk down the overvalued Kiwi. Chinese CPI was weaker than expected at 2.0% versus the estimated 2.2% figure and the previous 2.3% gain.

The US dollar returned some of its recent gains to its FX trading counterparts, as traders booked some profits off their positions. There were no major reports released from the US, as the medium-tier data such as wholesale inventories and crude oil inventories came in mostly in line with expectations. Initial jobless claims is due today and it might show a 306K reading, higher than the previous 302K figure. Stronger than expected data could lend more support for the dollar while weak results could keep gains in check.

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The euro struggled to hold on to its recent gains but its rallies appeared to be losing steam against its FX trading counterparts. Medium-tier data from the euro zone came in line with expectations, as the French non-farm payrolls report showed a 0.1% quarterly uptick while the industrial production report showed a 0.2% gain. German and French CPI figures are due today, along with the ECB monthly bulletin. Weak inflation readings might lead to more euro selling while strong data could keep it supported.

The pound continued to get weighed down by increasing prospects of Scotland’s independence, although it did manage to recover when Carney spoke of possibly hiking interest rates by spring next year. Earlier today, RICS house price balance showed a weaker than expected 40% reading versus the estimated 47% figure while the previous month’s report was downgraded to show a 48% figure. There are no other reports due from the UK today, which might leave Scottish polls as a main driver of pound FX trading price action.

The franc made a strong bounce to the euro as speculations of SNB intervention or easing grew. An SNB official was quoted saying that negative rates is also a possibility for the Swiss central bank. There are no reports due from Switzerland today, as the increasing likelihood of easing or FX trading intervention from the SNB could keep the franc weak.

The yen continued to give up ground to most of its FX trading counterparts, even as data from Japan came in strong today. The BSI manufacturing index climbed from -13.9 to 12.7, indicating a return to expansion. There are no reports due from Japan today, leaving the yen vulnerable to risk sentiment and speculations of BOJ easing.

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.