The US dollar had solid momentum through all sessions leading through to this morning’s New York close. We saw many US crosses peak this time yesterday and it’s been all downhill from there with the first solid trigger from a US dollar perspective last night being CPI which was on target, matched with slightly better than expected Retail Sales which grew 0.4% month on month. The Australian dollar has already eased half a cent through the Asian session before this release and it compounded the losses. The release of the FOMC minutes then chopped of another 30 pips of the Aussie with tapering discussed “in coming months” helping support the Greenback further.
The complication to judging the effect of the FOMC minutes had on US dollar demand overnight was the news that the European Central Bank could cut the deposit rate to a negative of 0.1% for commercial lenders who currently get 0%. The Euro lost 70 pips in quick time versus the US dollar after trading at 1.3542 USD moments before the news hit and it continued to fall down for the rest of the night to lose 1.2 cents at its worst. The move also helped trigger falls for the Pound which had surged post Bank of England minutes release to 1.6177 USD, it’s now trading 70 pips lower than that high.
The currency trading volatility will continue through this today with the flow of economic data to continue firstly with HSBC Flash Manufacturing PMI from China which is expected to remain steady. To follow will be the Bank of Japan’s Monetary Policy Statement and then we have a number of services and manufacturing PMI release from Europe.
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
