Daily FX Trading Update: Central Bank Events to Influence Price Action Today – Jan 21, 2015

Daily FX Trading Update: Central Bank Events to Influence Price Action Today - Jan 21, 2015

The US dollar moved mostly sideways in recent FX trading, although it managed to regain ground against the commodity currencies. There have been no major reports released from the US economy then, leaving the Greenback to act as a counter currency. For today, US building permits and housing starts data are up for release, with the former slated to climb from 1.05M to 1.06M and the latter likely to show an increase from 1.03M to 1.04M. Stronger than expected data could allow the dollar more upside.

The euro consolidated against most of its major FX trading counterparts, as traders hesitate to take large positions ahead of the ECB interest rate statement tomorrow. Data from the euro zone was stronger than expected yesterday, as the German ZEW economic sentiment index climbed from 34.9 to 48.4 and outpaced the consensus at 40.1. Meanwhile, the euro zone ZEW figure improved from 31.8 to 45.2, higher than the projected 37.6 figure. For today, there are no reports due from the euro zone.

FX Trading News

The pound resumed its drop to the dollar in yesterday’s FX trading sessions, as the release of the BOE minutes and the UK jobs report drew nearer. There were no reports released from the UK economy then. For today, the claimant count change could indicate a 24.2K increase in hiring and a pickup from 1.4% to 1.7% in average earnings. The BOE minutes could still show a 2-7 vote in favor of keeping rates on hold and a unanimous decision to keep asset purchases unchanged.

The franc was able to recover some of its FX trading losses to the dollar while holding steady against the euro. There have been no major reports out of Switzerland yesterday while today has the ZEW economic expectations index due. An improvement from the previous -4.9 reading could allow the franc to regain a bit of ground, although traders might refrain from taking large positions ahead of the ECB decision.

The yen advanced to most of its FX trading counterparts, except for the Australian dollar. Today’s monetary policy statement could trigger a lot of volatility among yen pairs, although no actual changes are expected. Dovish remarks could lead to yen weakness if this leads traders to anticipate more easing moves from the central bank in the wake of lower inflationary pressures.

The New Zealand dairy auction showed another uptick in prices, although this wasn’t enough to support the Kiwi when the country reported a 0.2% decline in its quarterly CPI. Chinese data came in slightly stronger than expected, allowing the Australian dollar to stay afloat against some of its peers, while the Loonie continued to slide lower. The BOC will make its policy statement today and could cause large moves for Loonie pairs.

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

Previous articleKey Support Keeps GBP/JPY Bullish in the Long-term
Next articleEURNZD Bearish Divergence Forex Trend Setup – Jan 21, 2015
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.