USD
The U.S. dollar was able to bounce back to action yesterday, but it remains to be seen whether this is just a temporary pullback.
The FOMC minutes showed that policymakers were open to tapering within the year, but this was before the week-long government shutdown took place. They did mention that they were concerned about budget cuts and the debt ceiling’s impact on economic performance. Obama’s nomination of Janet Yellen was also received positively by U.S. markets, as many anticipated continued stimulus under her watch.
EUR
The euro was sold off against the dollar and the yen yesterday, as risk aversion took hold of the markets. German industrial production increased by 1.4%, higher than the estimated 1.1% rise, while the previous month figure was revised to show a smaller decline. French industrial production data is up for release today and a strong figure could help the euro extend its gains.
GBP
The pound suffered a heavy selloff yesterday since the UK printed a bleak manufacturing production figure. The reading showed a 1.2% decline for September instead of the estimated 0.3% uptick. For today, the BOE will make its interest rate decision and no monetary policy changes are expected. A hawkish statement could be in the cards, as Carney has previously remarked that further QE won’t be necessary. However, the recent downturn in PMIs and production could cause him to shift his stance.
CHF The franc lost ground to the U.S. dollar in yesterday’s trading, pushing USD/CHF back above the .9100 handle. There were no reports released from Switzerland, as the move was mostly spurred by dollar strength. There are no reports due from Switzerland today, leaving USD/CHF at the mercy of U.S. data and risk sentiment once more.
JPY
The yen was tugged around in yesterday’s trading battle, as weak preliminary machine tool orders data caused a yen selloff but today’s set of strong Japanese reports allowed it to rebound. Core machinery orders jumped by 5.4% versus the estimated 2.9% rise while the tertiary industry activity index showed a 0.7% uptick. Data on consumer confidence is due today and it is expected to show a climb from 43.0 to 43.8.
Commodity Currencies (AUD, NZD, CAD) The comdolls struggled to hold their ground against the dollar yesterday, as the Loonie was the only currency that posted significant losses. Today, however, the Australian dollar dipped when the jobs report came in mixed. Hiring was weaker at 9.1K but the jobless rate improved from 5.8% to 5.6%. No other reports are due from the comdoll economies for the rest of the day so expect U.S. data or risk sentiment to drive price action for these pairs.
By Kate Curtis from Trader’s Way
