Currency Markets On Hold Ahead Of The Fed

The Asian session opened on a quiet note with a good deal of second tier data hitting the headlines.  Markets in Asia have been hit this week following the collapse of Greece’s bailout talks, but losses were limited Wednesday after U.S. stocks rose overnight as the Fed’s meeting kicked off. Speculators in China are looking for more volatility. The Shanghai market has gained more than 50% this year, and investors are increasingly protecting themselves against a selloff.

Traders are preparing for Federal Reserve Chair Janet Yellen to rally the dollar, after the currency’s latest attempt at a comeback fizzled this month. Bloomberg’s dollar index has slumped 1.4 percent in June as investors watch for signs the Fed remains on track for its first interest-rate increase since 2006 this year. While futures traders are certain the Fed will leave its key rate near zero Tuesday, policy makers will present quarterly forecasts for borrowing costs — the so-called dots — after which Yellen will hold a press conference. The currencies of Australia and New Zealand fell for a second day.

The Aussie is down 17 points at 0.7735 after comments from the RBA yesterday.  The AUD has strengthened slightly on the back of weak US economic data and the release of the Reserve Bank of Australia’s minutes but continues to trade within a tight range amid escalating concerns about a Greek financial crisis. The kiwi is trading at 0.6978 down by 9 points in the Asian session.  The dollar was little changed, holding below 70 US cents, after a relatively small decline in dairy prices on the GlobalDairyTrade platform and little sign of progress in Greece’s talks with creditors.  Data this morning showed a larger-than-expected current account surplus in the first quarter as spending by tourists widened the services balance and the country benefited from lower oil prices. The current account surplus was $662 million in the three months ended March 31, according to Statistics New Zealand.

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NZDUSD(60 minutes)20150617053817The Japanese yen is trading at 123.40 against the greenback while against the euro the JPY fell 15 points to 138.88.  Data this morning out of Japan showed that exports rose 2.4% from a year earlier to Y5.741 trillion in May, the finance ministry said Wednesday. The rate of expansion was the smallest since the start of a gentle uptrend in September, in a sign that a slowdown in the U.S. and weakening growth in China may be beginning to hinder a Japanese economic recovery. The world’s third-largest economy outshone the U.S. and Europe in the January-March quarter by growing an annualized 3.9% partly on accelerated business investment, but data released so far for the second quarter aren’t impressive, particularly consumer spending.

The euro recovered a few points in the morning session to trade at 1.1255 remaining range bound as traders pay little attention to the ongoing Greek drama. The US dollar is in the red ahead of the Fed announcement at 95.17.

 

[“source – fxempire.com”]

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