Daily FX Trading Update: RBNZ Kept Rates On Hold, Upbeat Forecasts – Mar 12, 2015

Daily FX Trading Update: RBNZ Kept Rates On Hold, Upbeat Forecasts - Mar 12, 2015

The US dollar was unstoppable in its recent FX trading rallies, as it edged lower to the pound and the euro yesterday. There have been no major reports out of the US economy but the increased speculations of a Fed rate hike in June have been supporting the dollar so far. For today, the US retail sales figures are up for release and these might confirm whether or not the strong hiring gains have translated to a pickup in spending. Headline retail sales could show a 0.3% gain while core retail sales might print a 0.6% increase.

The euro’s bloodbath carried on in recent FX trading sessions, despite the lack of any catalysts from the euro zone. It seems that doubts on the Greek debt plan and the impact of the ECB’s ongoing quantitative easing program are weighing heavily on the shared currency these days. There are still no reports lined up from the euro zone today, indicating that the ongoing trends could continue.

FX Trading News

The pound broke below a key FX trading support level against the dollar, as the pair is now trading below the 1.5000 major psychological level. UK manufacturing production was weaker than expected, as it indicated a 0.5% decline versus the projected 0.2% uptick. This suggests that the downturn in inflation is starting to take its toll on the economy, whether or not BOE Governor Carney admits it. UK trade balance is up for release today.

The franc continued its slide to most of its FX trading counterparts, although the drop seems to be subdued now that USDCHF is approaching levels prior to the SNB decision to scrap the franc peg. Profit-taking might take place soon and drag other franc pairs lower in the meantime. There are no events scheduled from Switzerland today.

The yen was still able to take advantage of the run in risk aversion so far, although it was slightly weaker to the US dollar. Earlier today, data from Japan came in weaker than expected, as the BSI manufacturing index dropped from 8.1 to 2.4 instead of the projected 5.7 reading. There are no other reports lined up from Japan for the rest of the week, indicating that FX trading risk sentiment might push yen pairs around.

The Kiwi regained ground after the RBNZ rate statement turned out more upbeat than expected. The central bank refrained from cutting rates and even sounded optimistic with its growth forecasts, citing that a period of stability might be maintained for the next two years. In Australia, the employment change figure came in line with expectations of a 15.6K gain for February but the previous reading was downgraded to show a sharper decline in hiring. Nonetheless, the jobless rate improved from 6.4% to 6.3% but this was mostly due to a drop in labor force participation.

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.