Daily FX Trading Review: FOMC Minutes Boost USD – Aug 21, 2014

Daily FX Trading Review: FOMC Minutes Boost USD - Aug 21, 2014

The Greenback had a strong run in the latest New York FX trading session, as the FOMC minutes revealed that policymakers are considering tightening monetary policy sooner than anticipated. Fed officials acknowledged the pickup in hiring and growth for the past few months, although they still cautioned about the economic risks present. This sets the tone for the upcoming Jackson Hole Symposium, during which Yellen could talk about the US labor market and the Fed’s monetary policy plans. US initial jobless claims and flash manufacturing PMI are up for release today.

The euro gave up more ground to the dollar, although it managed to hold on to some of its recent gains against its other FX trading counterparts. German PPI came in weaker than expected at a decline of 0.1% versus the estimated flat reading. German and French PMI figures for the manufacturing and services sectors are up for release today, with small declines expected. Weaker than expected data could push the euro much lower against its counterparts.

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The pound failed to take advantage of the relatively bullish BOE minutes, as the policymakers had a 2-7 vote to hike interest rates. As for asset purchases, the vote to keep it unchanged was unanimous. UK CBI industrial order expectations improved from 2 to 11, outpacing the consensus at 4. UK retail sales are due today and it might show a 0.4% increase, higher than the previous 0.1% uptick. Data on public sector net borrowing is also due today.

The franc weakened to the dollar in recent FX trading, as there were no releases from Switzerland to keep it supported. For today, the trade balance is up for release and it might show a wider surplus of 1.87 billion CHF. A higher than expected reading could keep the franc supported but a weak result could lead to more losses.

The yen gave up ground to the US dollar, as USDJPY broke past 103.00 when the FOMC minutes were released. It also lost ground to its other FX trading counterparts when risk appetite picked up later on. Japan’s flash manufacturing PMI was stronger than expected at 52.4 from 50.5, higher than the projected 51.7 reading. No other reports are due from Japan today, leaving the yen sensitive to risk sentiment.

The comdolls caved to the dollar in yesterday’s FX trading sessions, as the FOMC minutes boosted the Greenback. The Aussie and Kiwi weakened during the Asian session when RBA Governor Stevens attempted to jawbone the Australian dollar but stopped short of hinting at intervention. Earlier today, Australia’s CB leading index showed a 0.4% gain but China’s HSBC flash manufacturing PMI fell from 51.7 to 50.3. No other reports are due from the comdoll economies today.

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.