The Latest in Forex News & Analysis.

US Inflation

By AG | August 11, 2017 4:35 pm | 0 Comments

US CPI came out weaker than expected, 0.1% vs 0.2% MoM (Core), with the YoY reading at 1.7%. The inflation is still running below 2% as previously pointed out by the FED, fueling volatility around the greenback. Even if inflation is still below the target, the FED committed to shrink the balance sheet this year, remarking anyway that its policies are not on a pre-set course but instead are data driven.

It is interesting to see now what will happen if also the next reading will be disappointing like this one, putting the FED in a difficult position regarding its next move.

The Dollar Trade

By AG | August 9, 2017 10:34 am | 0 Comments

The USD scenario is currently mixed and unpredictable, especially in the short term.

On one side, you have the North Korea tensions that are fueling risk off moves across all asset classes. On the other hand anyway, it is important to remember that the strong reading on the US job market seen last Friday with NFP and yesterday with the JOLTs, are slowly convincing investors that inflation in the US might be on back on track.

JPY, CHF, Gold are up, with European and US Equity Indices down. The USD index anyway is on a 4 days positive streak which is not what market would expect on a typical risk off price action.

US NFP

By AG | August 4, 2017 4:22 pm | 0 Comments

US NFP came out better than expected 209k vs 183k forecast. Particularly significant was also the revision of the previous reading to 231k up  from 222k.

All eyes were anyway on the average hourly earnings that for the past few months have been the main focus of the market as a main indicator to try to anticipate any uptick in the inflation. The earnings were up 0.3% as expected and up from 0.2%.

The market reacted with strong USD buying that is about to close the trading session up 0.73%, the first big correction in the USD Index in a month of declines.

Important now is to determine if this “hope” of inflation will be followed by more positive data.

 

BOE Interest Rate decision

By AG | August 3, 2017 8:22 am | 0 Comments

BOE holds rates unchanged at 0.25%. Vote split 6-2 within the MPC.

Sterling immediately lower, mostly because of the statements that followed the rate announcement:

  • BOE cuts growth forecast
  • BOE is concerned with weak wage growth

The GDP for 2017 was revised 1.7% vs 1.9% prior. GDP for 2018 now expected at 1.6% vs 1.7% prior.

Uncertainty over Brexit talks is one of the main components on this UK economic slowdown.

 

Service PMI UK

By AG | 5:13 am | 0 Comments

Service PMI in UK came out stronger than expected 53.8 vs 53.6 forecast. The reading suggests an expansion in the UK economy with the pair GBP/USD  trading higher at 1.3268.

All eyes now on the UK inflation report, interest rate decision and the press conference by BoE president Carney later today.

 

US GDP

By AG | July 28, 2017 10:56 am | 0 Comments

US GDP as expected at 2.6%. The market reacted with USD selling anyway because of the Employment Cost Index (0.5% vs 0.6% forecast) and Employment Wages (0.5% vs 0.8% prior), that raise question about the improvement in inflation.

Biggest mover was USD/CAD, also because of the CAD GDP MoM (0.6% vs 0.2% forecast) and the continued rally in the price of Crude Oil.

 

 

 

FED interest rate decision

By AG | July 26, 2017 2:36 pm | 0 Comments

The FED disappointed the USD bulls by saying that “balance sheet unwind will start relatively soon”, leaving too much room for uncertainty and timing of the operation. The market reacted immediately with USD selloff that continued steady bringing EUR/USD at 1.17 and pushing higher all the other currencies against the greenback.

Important to mention anyway are the bullish EUR comments by ECB Nowotny who stated (few minutes before the FED announcement) that with the risk of deflation gone in the euro area, the Central Bank has to consider the technical aspects of QE end.

 

 

 

ECB press conference

By AG | July 20, 2017 10:59 am | 0 Comments

The ECB maintained the deposit rate at -0.4% and the refinancing rate at at 0%. In the statement, the Central Bank confirmed also its commitment to buy 60 Billion Euro/month for the rest of the 2017.

During the press conference, a cautious President Draghi tried to balance market expectations highlighting the ECB flexibility if things would turn bad for the Eurozone economy.

On one side, the economy is doing better and the risks of growth are balanced. On the other, the ECB reserves to right to continue with easing measures even after 2017 if needed. Mr Draghi pointed out that headline inflation is expected to remain subdued, while headline inflation should pick up as a result of the monetary policy measures. Wage growth will follow but it might take longer because many contracts were already negotiated and will need some time to be updated.

All eyes are now on the September meeting. President Draghi said that this fall the central bank will decide what to do next based on the state of the economy. even if September meeting was mentioned many time, the President was very clear in explaining that September anyway does not represent a deadline.

The market reacted buying Euro across the board, with the pair EUR/USD trading at 1.1630 at the time of this print. Gold up on a softer dollar and European equities down, all indicators that the market is expecting fireworks in the meetings to come.

USD/CAD

By AG | July 12, 2017 2:43 pm | 0 Comments

USD/CAD impressive move today, triggered by BoC interest rate decision and continued during Poloz’s conference. The Central Bank raised rates from %0.5 to 0.75% as expected by the market. The following positive comments regarding the state of the economy and the inflation expectations, started a long squeeze that brought the pair to lose 1.5% on the day.

FED Yellen Testifies in front of Congressional Committee

By AG | 10:46 am | 0 Comments

FED chair Yellen released a statement earlier in the NY session, before appearing in front of the congressional committee to report about the state of the economy.

She confirmed that additional rate hikes are appropriate over the next years. As always, the main point of concern remains inflation. The FED is counting on an increase in productivity and an increase in the drilling activity to give a boost to wages in the US. The market now is extremely keen to read thru the numbers, as we saw last Friday with NFP that came out better than expected but with lower wages. The effect, as we now know, was a broad dollar selling seen toward the end of that day and the beginning of this week.

Extremely important is also a note that confirms that FED funds rate are still below their natural level and that the FED does not intend to use its balance sheet as the main tool for monetary policy in normal times. The key tool for monetary policy remains the interest rate decision.

Last, Chair Yellen pointed out multiple times that FED policies are not on a pre-set course and that the Central Banks might act accordingly if the inflation undershoots for longer than expected.

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FXDD Now provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FXDD Now specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD Now expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.