Daily FX Trading Update: Gearing Up for the BOE Decision

The US dollar regained ground against its forex counterparts, thanks to slightly stronger data. The final services PMI was upgraded from 50.9 to 51.4 to indicate a faster pace of expansion than initially reported. However, the ISM non-manufacturing PMI fell short of expectations when it dropped from 56.5 to 55.5 versus the projected dip to 56.0. For today, the initial jobless claims report is due along with the US factory orders report.
The euro was mostly weaker against its peers despite mixed data from the region. Spain’s services PMI missed expectations while Italy’s services PMI printed stronger than expected results. Final services PMI readings from Germany and France didn’t have any revisions while the region’s retail sales stayed flat as expected. There are no major reports due from the euro zone today.
The pound was able to stay afloat when the services PMI didn’t undergo any revisions from its initially reported 47.4 figure. Pound pairs could be due for additional volatility today as the BOE will make its policy decision. An interest rate cut of 0.25% is widely expected, with some even expecting higher bond purchases from the central bank. Updated growth and inflation forecasts are also due.
The franc returned some of its recent gains as there were no reports out of Switzerland yesterday. Today the SECO consumer climate index is due and a fall from -15 to -16 is expected. Other than that, risk sentiment could be the main driver of franc price action.
The yen slowly edged higher against some of its forex rivals as there were no new catalysts from Japan. There are still no reports lined up from the Japanese economy today so slow price action could be in the cards unless there are any announcements from the Japanese government or any changes in market sentiment.
Commodity Currencies (AUD, NZD, CAD)
The Loonie was able to rake in some gains after the US crude oil inventories report showed a buildup in crude oil stockpiles offset by a slump in gasoline supplies. In New Zealand, the ANZ commodity price index fell from 3.7% to 2.0%. Australia reported a meager 0.1% uptick in retail sales versus the projected 0.3% gain. There are no other reports due from the comdoll economies for 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.