USD

The US dollar is slightly higher against its counterparts as traders appear to be pricing in positive expectations for the FOMC decision.

There were no reports out of the US economy yesterday. A rate hike of 0.25% is widely expected, so traders will be keeping close tabs on the updated economic forecasts and dot plot of rate change projections. It will also be Powell’s first post-FOMC presser, so his views could set the tone for policy expectations in the months ahead. 

EUR

The euro returned most of its recent gains to its peers as medium-tier reports turned out mostly weaker than expected. The German ZEW economic sentiment index fell from 17.8 to 5.1 while region’s reading fell from 29.3 to 13.4. There are no major reports due from the euro zone today, so the shared currency could be more sensitive to its counterparts or overall sentiment.

GBP

The pound also dipped against its peers when UK inflation reports disappointed. The headline figure slipped from 3.0% to 2.7% versus the estimated fall to 2.8% while core CPI dropped from 2.7% to 2.4% versus the 2.5% consensus. Jobs data is due from the UK today and the claimant count could show a 3.1K drop in joblessness. The average earnings index could rise from 2.5% to 2.6% to signal potentially stronger inflation and consumer spending. 

CHF

The franc was mostly weaker against its peers as dollar strength returned and risk appetite was present. Economic data from Switzerland was better than expected, though, as the trade balance came in at 3.14 billion CHF versus the estimated 1.87 billion CHF surplus and the earlier 2.07 billion CHF. The SNB Quarterly Bulletin is due today.

JPY

The yen also returned some of its earlier gains as risk appetite improved and the dollar extended its gains. There were no major reports out of Japan yesterday and none are due today s banks are closed for the holiday. This suggests that dollar action and overall sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie managed to take a break from its slide as oil prices picked up on geopolitical risks in Iran and Venezuela. Canadian wholesale sales also came in slightly better than expected with a 0.1% uptick. In New Zealand, the GDT auction yielded a 1.2% fall in dairy prices. The RBNZ decision is also coming up and a neutral statement is eyed. 

By Kate Curtis from Trader’s Way