USD
The US dollar was unable to pocket more gains, as the risk-on trading environment kept its rallies at bay. There were no reports released from the US but cautious comments from Fed officials weighed on the lower-yielding currency.
FOMC member Evans noted that the central bank is close to reaching $1.5 trillion in bond purchases, which led many to believe that the Fed might be forced to taper soon. However, Evans also stressed that the central bank is in no rush to reduce stimulus at this point. Bernanke echoed this stance in saying that interest rates will be kept low until the economic recovery shows strong momentum, and he reiterated that fiscal stability is also a priority. Dollar pairs could see more volatility today as the US releases its retail sales and CPI figures. Weaker than expected reports might trigger a sharp selloff for the dollar.
EUR
The euro managed to extend its gains to the yen and dollar, as EUR/JPY reached a new 4-year high. German ZEW economic expectations came in line with consensus at 54.6 but the euro was weighed down by downbeat remarks from ECB officials. Only the German PPI is up for release from the euro zone today and this isn’t expected to have a huge impact on euro price movement.
GBP
The pound was stuck in its range against the dollar but managed to rebound against the yen in yesterday’s trading, despite the lack of major reports from the UK. For today, the BOE meeting minutes are up for release and traders are expecting to hear positive remarks, as the central bank recently gave upbeat forecasts for hiring. A couple of BOE officials are also set to give speeches today, which might trigger volatility for pound pairs.
CHF
The Swiss franc held on to its current gains to the dollar, as USD/CHF tested the .9100 major psychological support level. There were no reports released from Switzerland then and only the ZEW economic expectations report is due today. The report could show an improvement from the previous 24.9 figure, which might allow USD/CHF to break below .9100.
JPY
The yen continued to weaken against its major counterparts as risk appetite remained strong yesterday. EUR/JPY surged to new 4-year highs while USD/JPY made another test of the 100.00 mark. There were no reports released from Japan yesterday while the trade balance released today was short of expectations at -1.07T JPY vs. the consensus at -0.88T JPY. The all industries activity index is due in today’s Asian session and a small improvement is eyed.
Commodity Currencies (AUD, NZD, CAD)
The comdolls tried to extend their gains to the dollar, as AUD/USD climbed to the .9450 area while NZD/USD stayed above .8350. New Zealand inflation expectations for the quarter was slightly weaker at 2.3% versus the previous 2.4% while the RBA meeting minutes showed that the central bank isn’t looking to cut rates anytime soon. Up ahead we have Canadian wholesale sales and a speech by BOC Governor Poloz, which might spark volatility for Loonie pairs.
By Kate Curtis from Trader’s Way
