Daily FX Trading Update: BOJ Ready to Exit Stimulus? – Apr. 24, 2015

Daily FX Trading Update: BOJ Ready to Exit Stimulus? - Apr. 24, 2015

The dollar returned its recent FX trading gains once more when US data surprised to the downside yesterday. Initial jobless claims showed a higher than expected 295K reading versus the projected 288K figure while the flash manufacturing PMI slumped from 55.7 to 54.2. New home sales data was also weaker than expected, as the reading fell from 543K to 481K. Durable goods orders data are up for release today and both headline and core figures are expected to show a recovery.

The euro regained ground in recent FX trading as traders reduced their positions ahead of the Eurogroup meetings. Officials are set to discuss the latest set of economic reforms from Greece and decide whether or not to release the next set of bailout funds which would allow the nation to avoid defaulting on its debt. Data from the euro zone was mostly weaker than expected though, as manufacturing and services PMI readings from Germany and France fell short of consensus. The German Ifo business climate index is also due today and an improvement from 107.9 to 108.5 is eyed.

FX Trading News

The pound gave up more ground to some of its FX trading rivals when the UK retail sales came in weaker than expected. The report showed a 0.5% decline for March while the previous reading was downgraded to show a mere 0.6% uptick. There are no major reports due from the UK today, leaving the pound to take its cue from risk sentiment and euro zone updates.

The franc recouped its recent FX trading losses after the SNB’s announcement on reducing exemptions for negative deposit rates. Swiss trade balance was also better than expected, as the surplus widened from 2.32 billion CHF to 2.52 billion CHF. No reports are due from the Swiss economy today, which means that the franc might be sensitive to euro zone news.

The yen regained ground when BOJ Governor Kuroda said that policymakers are already discussing the technical details of an exit strategy from their QE program. He noted that the economy can reach its inflation target by 2016. Earlier today, data from Japan came in mixed, as the SPPI fell short of expectations while the all industries activity index surprised to the upside.

The Kiwi continued to tumble after an RBNZ official reiterated that they’re not looking to hike interest rates anytime soon. The Aussie also took a few hits when the NAB business confidence reading dropped from 2 to 0 in the first quarter while the HSBC flash manufacturing PMI from China fell short of expectations. BOC Governor Poloz is set to give a testimony in the New York trading session and possibly spur more FX trading moves from the Loonie.

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.