Daily FX Trading Update: BOE Kept Monetary Policy Unchanged – May 12, 2015

Daily FX Trading Update: BOE Kept Monetary Policy Unchanged - May 12, 2015

The US dollar had a mixed performance as it managed to advance against most of its FX trading counterparts but gave up ground to the pound. There have been no major reports out of the US economy at the start of the week and it seems that China’s interest rate announcement weighed on risk sentiment and favored the lower-yielding US dollar. For today, only the medium-tier JOLTS job openings report is due, along with a speech by FOMC member Williams.

The euro slid lower to its FX trading rivals when the Eurogroup meetings ended without any debt deal for Greece. Government officials have expressed confidence that they can be able to meet their payment obligations due this week and this might be enough to keep the shared currency afloat for the time being. The focus could then shift to their next set of payments due in June, as there are no major reports due from the euro zone today.

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The pound got a strong boost after the BOE decided to keep interest rates and bond purchases unchanged in their latest rate statement. The rally might’ve simply been a sign of relief after the central bank retained its usual stance even after the UK elections. Traders might now turn their attention to the BOE Inflation Report later on this week and the UK jobs release, as this should shed more light on the country’s economic performance. For today, UK manufacturing production data is due and a 0.3% uptick is eyed.

The franc continued to slide lower against the dollar, as there were no reports to keep the Swiss currency supported yesterday. There are still no reports due from Switzerland today, leaving the franc functioning more as a counter currency against its FX trading rivals.

The yen continued to weaken to the dollar and to most of its FX trading counterparts when risk sentiment picked up in the Asian session. China’s interest rate cut managed to provide support to Asian equities, allowing the Nikkei to end in the green for Monday. There have been no major reports released from Japan then and none are due today.

The Kiwi was still in a weak spot against its FX trading counterparts but the Aussie drew a bit of support from China’s surprise rate cut, as this could boost business activity and demand for raw material exports. NAB business confidence in Australia held steady at 3 in April, signifying the lack of improvement in sentiment. The RBNZ financial stability report is up for release later on, although this might not be enough to pause the Kiwi’s slide.

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