Daily FX Trading Update: UK Jobs Data and BOE Inflation Report Due – Nov 12, 2014

Daily FX Trading Update: UK Jobs Data and BOE Inflation Report Due - Nov 12, 2014

The US dollar gave back some of its recent gains to its FX trading counterparts as US traders were off on a Veterans Day holiday yesterday. Risk sentiment appeared to improve as geopolitical risks faded and US equity indices soared to new highs, but the dollar could still draw strong support once uncertainty takes center stage once more. There are still no major reports up for release from the US economy today, which suggests that sentiment could continue to be a main driver of price action.

The euro bounced back to the dollar in recent FX trading but it remains to be seen whether the shared currency could hold on to its gains or not. There were no major reports released from the euro zone yesterday while today has the German wholesale price index and the euro zone industrial production reports on tap. Both reports are slated to show improvements from their previous readings, which might lend a bit more support for the euro.

FX Trading Fundamentals

The pound recovered to most of its major FX trading counterparts, as profit-taking took place prior to today’s big events. Only the BRC retail sales monitor was released from the UK yesterday and it showed a flat reading for October. Today, the UK claimant count change is due and it might show a strong 24.9K pickup in hiring, which could be enough to bring the jobless rate down from 6.0% to 5.9%. Also due today is the BOE inflation report, which would contain central bank economic forecasts. Any downgrades could lead to pound weakness as it might push back BOE rate hike expectations for later next year.

The franc continued to appreciate against the euro as traders incorporated the potential impact of a Swiss gold initiative, which would require the SNB to hold at least 20% in gold reserves. This could limit the central bank’s ability to intervene in the market if EURCHF tests the 1.2000 floor, as this would push the gold holdings ratio much lower. There are no reports due from Switzerland today though, leaving the franc sensitive to news regarding the gold initiative.

The yen resumed its drop to its major FX trading counterparts, as a few medium-tier data from Japan came in below expectations. The consumer confidence index slipped from 39.9 to 38.9 while the Economy Watchers sentiment index fell from 47.4 to 44.0. Earlier today, Japan’s tertiary industry activity index marked a 1.0% gain as expected and renewed a bit of confidence in the economy. No other reports are due from Japan today.

The comdolls were in a good mood yesterday, as risk appetite was responsible for driving most of the financial markets price action. In today’s Asian session, Australia reported a 1.9% increase in its Westpac consumer confidence index, allowing AUDUSD to test the .8700 handle. There are no other reports lined up from the comdoll economies today, leaving risk sentiment mostly in control of FX trading movements.

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.