Forex Trading Library

Forex Afternoon Wrap for 3rd February 2015

0 209

Key Forex Afternoon Notes:

  • Australia building approvals m/m -3.3% vs. -5%; building approvals y/y 8.8% vs. 5.1%
  • RBA rate: 2.25% from 2.5%
  • Switzerland exports m/m -3.1% vs. -0.1% previously
  • UK construction PMI 59.1 vs. 57
  • Eurozone PPI m/m -1% vs. -0.7%; PPI y/y -2.7% vs. -2.5%
  • Italy CPI m/m -0.4% vs. -0.2%; CPI y/y -0.6% vs. -0.3%
  • Canada RMPI m/m -7.6% -9%

Later:

  • US Factory orders
  • New Zealand Global dairy price index
  • New Zealand unemployment change; unemployment rate

Currency markets got off to an early start with the RBA’s monetary policy which saw a cut of 25 bps from the RBA. With a divided consensus on the RBA’s decision, the markets were well positioned to the news event. RBA Governor Stevens continued jawboning the Aussie dollar, calling for a weaker exchange rate in order to sustain economic growth in light of the declining commodity prices globally.

While the Aussie saw a reactive sell off, losing close to 1% for the day across the board, the currency managed to stabilize into the European trading session. The Kiwi Dollar was also weaker on account of the selloff in the Aussie dollar, despite the lack of any fundamentals from New Zealand. The main risk for the Kiwi dollar today is the pending Global Dairy Trade index data followed by the late night release of the labor market data.

The European trading session was relatively quiet with the EURUSD trading within the tight range since the start of this week, supported above $1.13 levels. Eurozone PPI declined both on the monthly and annualized readings, but the markets shrugged off the data including the Italian CPI which saw negative readings for both the monthly and annualized prints.

The British Pound managed to stabilize after posting sharp losses yesterday. Construction PMI managed to beat estimates rising to 59.1. The British pound however did not react much on the news. Against the US Dollar, the Cable managed to limit its losses to lows of 1.4988 before reversing its losses to trade near 1.50 levels.

Switzerland posted its monthly import/exports data which showed a sharp decline in exports, as they fell -3.1% for the month, reflecting the general view of a stronger Swiss Franc hurting the export markets in the region. Although the risk of the SNB has faded somewhat there has been speculation going on about the SNB looking to impose the EURCHF floor to 1.10 levels as well as rumors of the SNB intervention in the currency markets.

The US trading session kicked off with any major events, but the Greenback was looking weaker early on while the Canadian dollar and the Kiwi managed to lift off from the intraday lows. The Kiwi is expected to remain volatile as the Global dairy price index and later in the night, the New Zealand unemployment data are due to be released, which could tilt the scales in either direction.

 

Leave A Reply

Your email address will not be published.