The beginning of the two day FOMC meeting was not enough to help the US dollar overnight which wasn’t able to turn around the tide in any of yesterday’s sessions. The Australian Dollar briefly dipped below 93 US cents during our local session before it then appreciated for the next 13 hours reaching a high of 93.66 US cents and in current trading sits a few pips shy of that mark. Helping the Greenback weakness was the softer the anticipated US CPI data which had a 0.1% increase below expectations for the monthly change. The recent data is helping reduce expectations for a cut to tapering to possibly be only $5 Billion to be announced earlier tomorrow morning.
The Euro had a solid overnight’s trade also with German ZEW Economic Sentiment improving to 49.6 which helped the Euro up to 1.3369 USD but not back up to Mondays high. The Euro had a much more volatile session against the Pound with a 40 pip gain to 84.1 pence as Core UK CPI dropped to 2.0% and the headline rate remained at 2.7%.
Earlier this morning New Zealand’s Current account deficit expanded less than forecast to -NZ$1.25 billion yet we didn’t see much effect with the Australian dollar still firming since late in the US session versus the Kiwi Dollar. That data was the only release for the rest of the day, both locally and regionally and that has been vindicated by the lack of volatility in currency markets over the last 6 hours which is likely to continue on.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
