USD
The US dollar staged a surprise rally after the FOMC interest rate decision, as Chairman Bernanke sounded less dovish with his economic assessment and outlook.
In fact, the Fed head made no mention of any delays in the taper because of the recent government shutdown or downturn in hiring. This was enough for some traders to start pricing in the possibility of a December taper should economic conditions improve in the coming weeks. As for data, the ADP non-farm employment change was weaker than expected at 130K versus the 151K estimate. For today, US initial jobless claims and Chicago PMI are up for release. Jobless claims are projected to show a 341K figure while the Chicago PMI could print a drop from 55.7 to 55.1.
EUR
The euro traded lower against the US dollar after the FOMC interest rate statement, despite the recent improvements in the euro zone. Germany’s unemployment change figure came in close to consensus with a mere 2K rise in joblessness while Spain confirmed that it was out of a recession with its 0.1% growth figure. German retail sales and GfK consumer climate data are up for release today, along with French consumer spending and overall euro zone jobs data. Small improvements are eyed for Germany’s figures, which might be enough to keep the euro supported.
GBP
The pound edged lower to test the 1.6000 major psychological level against the US dollar in yesterday’s trading, despite the lack of data from the UK. Earlier today, GfK consumer confidence declined from -10 to -11 instead of improving to -8. Only the Nationwide HPI is left on the UK’s economic schedule for today and a 0.7% increase in house prices is expected. This isn’t a major economic report so it’s likely that GBP/USD will be stuck in its current levels unless there’s a major change in market sentiment.
CHF
The franc was able to gain against the US dollar when Switzerland printed a better than expected KOF economic barometer reading, but these gains were wiped out when the FOMC statement turned out less dovish than expected. The KOF figure jumped from 1.54 to 1.72, outpacing the consensus at 1.56. There are no other reports due from Switzerland today so the franc might have to struggle to stay below the .9000 handle if dollar strength is still in play today.
JPY
The yen pairs were stuck in consolidation for the most part as traders awaited today’s BOJ interest rate decision. Data from Japan was weaker than expected yesterday, as the industrial production showed a 1.5% increase instead of the estimated 1.8% growth. Earlier today, the manufacturing PMI release showed an improvement from 52.5 to 54.2.
Commodity Currencies (AUD, NZD, CAD) The comdolls chalked up another day of losses to the dollar but AUD/USD managed on hold on above .9500 while NZD/USD was able to stay above .8200. The RBNZ decided to keep monetary policy unchanged for now, as inflationary concerns were keeping policymakers from cutting interest rates. Earlier today, Australia reported a strong 14.4% jump in building approvals and a 6.1% increase in import prices. Later on, Canada will print its monthly GDP and possibly show a 0.2% growth figure.
By Kate Curtis from Trader’s Way
