USD

The U.S. dollar lost ground to most of its major counterparts as some Fed officials talked about the low likelihood that the Fed will reduce its stimulus program soon. 

Fed officials Bullard and Dudley seem to favor the current easing measures, saying that these are appropriate for the meantime and that stronger improvements are necessary before warranting a reduction of bond purchases. With that, market participants will be all eyes and ears on the release of the FOMC meeting minutes later today to see how the Fed is divided on the issue. Fed head Bernanke is also set to give a speech later today and possibly talk about his monetary policy stance as well.

EUR

The euro continues to recover against the U.S. dollar as EUR/USD has found itself back above the 1.2900 major psychological resistance in today’s Asian session. The only events on the euro zone’s calendar today are the current account release and the German bond auction. With that, EUR/USD action could be more dependent on U.S. market events, which are Bernanke’s speech and the FOMC minutes release.

 GBP

There are several event risks on the pound’s calendar today, and these are the release of the MPC meeting minutes and the UK retail sales figure. The pound underwent heavy selling pressure yesterday when annual inflation missed forecasts of a decline from 2.8% to 2.6% and fell all the way down to 2.4%. This suggests that the central bank has room to ease further if necessary, and the minutes of their lates meeting should shed light on the outlook of monetary policy committee members.

CHF

 SNB Chairman Thomas Jordan is set to give a speech in today’s London session, adding to the event risk for USD/CHF. So far, the pair has been very sensitive to U.S. economic updates, with the FOMC meeting minutes and Bernanke’s testimony set to rock the markets in today’s U.S. session.

JPY        

As expected, the Bank of Japan made no changes to its monetary policy in today’s interest rate decision. However, Governor Kuroda did give himself a pat on the back for the positive effects of their aggressive easing program, which boosted domestic economic activity and provided support for Japan’s exports. The Japanese trade balance did show a slight improvement for April but the actual figure was still weaker than expected because of the slowdown in Europe’s demand for Japanese products.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies struggled to hold their ground against the U.S. dollar as the lack of top-tier data kept these pairs mostly in sideways consolidation. AUD/USD continues to test the .9800 major psychological resistance as the country printed a 7.0% decline in Westpac consumer confidence. Meanwhile, Canada is gearing up to release the latest retail sales figures in today’s U.S. session.

By Kate Curtis from Trader’s Way