Forex Trading Library

Forex Afternoon Wrap – 17/09

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Markets hold, awaiting Federal Reserve rate hike decision

Today’s Economic Data:

  • New Zealand GDP q/q 0.4 vs. 0.5%
  • Japan trade balance -0.36tn vs. -0.35tn
  • BoJ Gov. Kuroda speech
  • SNB leaves Libor rate unchanged at -0.75%
  • UK retail sales m/m 0.2% vs. 0.2%; retail sales y/y 3.7% vs. 3.8%
  • US Building permits 3.5% vs. 2.5%
  • US Housing starts -3.0% vs. -3.6%
  • Weekly jobless claims 264k vs. 276k

Later:

  • Philly Fed manufacturing index
  • FOMC Statement
  • Fed funds rate
  • FOMC Press conference

The currency markets were trading mix as the Yen weakened considerably since late yesterday. The Yen was down -0.33% by mid-European trading session with the British Pound and the Euro taking the lead. The commodity risk currencies, Aussie and the Kiwi were trending lower. Data from the early Asian trading session saw the Kiwi GDP grow at a slower pace, rising 0.4%, missing estimates of 0.5%. However, compared to the previous quarter, the GDP was much stronger, up from 0.2% previously. The Kiwi however came under strong selling pressure and is currently down -0.47% for the day.

The Asian equity markets were largely mixed with the Nikkei 225 up 1.43% for the day while the Shanghai Composite and the Hang Seng were both down -2.08% and -0.51% respectively.

Bank of Japan Governor, Kuroda in a press conference today reiterated that inflation in Japan would accelerate towards the 2% target rate as the effects of lower Crude oil prices dissipate.  He noted that the Japanese economy continues to expand with a moderate recovery. The Bank of Japan had left interest rates unchanged at its meeting this week.

In the European session, the UK retail sales data disappointed with the annualized retal sales down 3.7% below estimates of 3.8%. The British Pound was however unmoved by the data and continued to maintain a bullish stance. The Pound was up 0.29% against the Greenback at the time of writing.

There was not much of data from Europe, but the single currency saw a bullish day so far, rising 0.24% against the Greenback.

The Swiss national bank today decided to leave the Libor rate unchanged at -0.75%. In his speech, SNB Chief Thomas Jordan struck a familiar narrative calling the Swiss Franc to be overvalued. The bank expects Swiss inflation in 2015 to be at -1.25%, revised down from -1.0% earlier. The Swiss Franc, after the press conference strengthened significantly, gaining 0.21% against the US Dollar.

The US trading session today saw some economic data being released from the housing markets.  Housing starts declined less than expected by -3.0% while building permits rose 3.5%. Weekly jobless claims were also better than expecting, rising 264k below the estimates. Overall the data was largely supportive of the US Dollar, but the markets are expected to stay range bound into the Fed’s FOMC event later this evening.

On the commodities front, Crude Oil was down -0.83% for the trading, trading at $47.15 while Gold futures were down -0.22%, trading near the 1120 handle.

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