Daily FX Trading Update: BOE Votes 8-1 to Hold Interest Rates – Sept 11, 2015

Daily FX Trading Update: BOE Votes 8-1 to Hold Interest Rates - Sept 11, 2015

The US dollar gave up further ground in recent trading sessions, as risk appetite continued to improve. Data from the US came in mostly in line with expectations, with the initial jobless claims report showing a drop from 281K to 275K in unemployment claimants. Import prices were down 1.8%, slightly worse than the projected 1.7% decline and the previous 0.9% drop. For today, PPI readings and the preliminary UoM consumer sentiment index is due. Producer prices could show a 0.1% decline while consumer confidence might see a dip from 91.9 to 91.4.

The euro extended its gains versus the dollar and the yen, despite mixed medium-tier data from the euro zone. French non-farm payrolls ticked up by 0.2% while industrial production slumped by 0.8% instead of picking up by 0.3%. A few more more medium-tier reports are lined up today, although risk sentiment might be responsible for pushing euro pairs around.

The pound scored some gains after the BOE interest rate statement even though the central bank opted to keep rates and asset purchases unchanged as expected. Minutes of their meeting revealed that policymakers aren’t very worried about the downturn in China and it’s potential impact on the British economy, as the UK fundamentals are relatively strong. Only one member voted to hike rates, citing that the projected pickup in inflation is enough reason to warrant tightening. Only the construction output, consumer inflation expectations, and a speech by MPC member Forbes are lined up from the UK today.

The franc was also able to advance against the dollar, despite the lack of data from Switzerland. There are still no reports due from the Swiss economy today, which suggests that the currency could take its cue from euro action or overall market sentiment.

The yen continued to lose traction in recent trading sessions, spurred by the pickup in risk appetite and the dovish outlook from the BOJ. Data from Japan was weaker than expected, with producer prices and core machinery orders both falling by 3.6%. Earlier today, Japan’s BSI manufacturing index showed an improvement from -6.0 to +11.0, reflecting a return to optimism for the current quarter.

Commodity Currencies (AUD, NZD, CAD)
The comdolls were able to limit their losses, despite the recent RBNZ rate cut. Crude oil inventories came in at 2.6 million barrels for the US, causing a bit of a decline for prices due to rising stockpiles. Earlier today, New Zealand showed a climb in its Business NZ manufacturing index from 53.7 to 55.0, showing a pickup in expansion. No other reports are due from the comdoll economies today.

To contact the reporter of the story: Samuel Rae at samuel@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.