Daily FX Trading Review: FOMC Minutes to Shape USD Trend – Oct 8, 2014

Daily FX Trading Review: FOMC Minutes to Shape USD Trend - Oct 8, 2014

The US dollar had trouble getting back on its feet in yesterday’s FX trading sessions as most traders were still in profit-taking mode. Data from the US economy was mixed, as the JOLTS job openings came in stronger than expected while the IBD/TIPP economic optimism index fell short of estimates. Biases from FOMC officials who gave speeches were also mixed, discouraging traders from piling on their long dollar trades ahead of today’s FOMC minutes release. Indications that the Fed is seriously considering an exit strategy to be implemented soon might lead to more dollar gains.

The euro struggled to edge higher against its FX trading counterparts, despite weaker than expected data from Germany. The country’s industrial production report marked a 4.0% decline, worse than the projected 1.4% drop, while the previous month’s reading was downgraded to show a smaller increase. There are no reports due from the euro zone today.

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The pound was unable to advance further in recent FX trading as UK manufacturing production came in weaker than expected. The report showed a mere 0.1% uptick instead of the projected 0.2% increase, slower than the previous 0.3% gain. Industrial production stayed flat in the same period. UK Halifax HPI is up for release today and it might show a 0.2% uptick, with weaker than expected data likely to weigh further on the pound.

The franc edged higher against the euro and the dollar recently, despite mixed data from Switzerland. The CPI showed a small 0.1% uptick instead of the projected 0.2% increase in price levels, reminding that deflation could still be a concern in the country. However, the retail sales report showed a strong 1.9% rebound while the previous figure was upgraded to show a smaller decline. Swiss jobless rate is due today and an improvement from 3.2% to 3.1% is eyed.

The yen regained strength to most of its major FX trading counterparts, particularly the dollar and the Kiwi. The BOJ decided to keep policy unchanged as expected, but cited weakness in production due to the sales tax hike. Earlier today, Japan’s current account balance came in weaker than expected as it saw a smaller surplus. The BOJ Monthly Report and Economy Watchers sentiment index is due today.

The comdolls struggled to recover in recent FX trading but were unable to take advantage of dollar weakness. The RBA decided to keep rates unchanged at 2.50% as expected, although they mentioned that hiring has been unusually volatile and that house prices remain a concern. Canadian building permits was weaker than expected at -27.3% versus the projected 6.0% drop while the previous data was downgraded. Canadian housing starts is up for release later and another weak reading might lead to a Loonie selloff.

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.