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European Session – Dollar extends rally on drop in US jobless claims, sterling erases post UK retail sales gains

Posted on May 19, 2016 at 1:32 pm GMT

Sterling outperformed early in the European session today despite a stronger dollar that was boosted by hawkish FOMC minutes. The pound was lifted by solid UK retail sales data which showed volumes were up 1.3% month-on-month in April from a revised -0.5% in March and also beat expectations for a 0.5% increase. Year-on-year, sales rose 4.3%. The upbeat data suggest that consumer confidence appears strong in the UK despite uncertainty of the outcome of the Brexit referendum in June. Meanwhile, [..]

Fed minutes alert markets to possible June rate hike; dollar charges higher

Posted on May 19, 2016 at 11:43 am GMT

The meeting minutes of the FOMC’s April policy meeting published yesterday delivered a wake-up call to the markets, who had all but priced out a rate hike in June. The minutes gave a more confident assessment than what the markets were anticipating on the likelihood of inflation returning to the Fed’s 2% target in the medium term. The Committee also set out a specific set of conditions that if met by June, would form a strong case for a rate increase [..]

Asian Session – Dollar near 2-month highs as Fed minutes leave door open for June hike

Posted on May 19, 2016 at 7:40 am GMT

Hawkish minutes by the Fed drove the dollar higher towards two-month highs in early Asian trading on Thursday as investors re-adjusted their expectations of a June rate hike. In the minutes of the April policy meeting, FOMC participants agreed that if the incoming data points to higher second quarter growth, improving labour market conditions and inflation rising towards the Fed’s 2% target, then it would be appropriate for the Committee to increase the Fed Funds rate in June. Several Fed [..]

Technical analysis – USDJPY breaks out of range, extends bullish phase

Posted on May 19, 2016 at 7:03 am GMT

USDJPY turned more bullish after breaking out of a recent range that kept the pair within the 108 level and the 61.8% Fibonacci at 109.39 (which is the retracement of the downleg from 111.87 and 105.54). There is scope for further upside momentum as RSI has risen above 50 into bullish territory. Prices would need to break above 110.50 in order to clear the way for a retest of the April 28 high at 111.87 and see a continuation of [..]

European Session – Dollar rises to 3-week high versus yen ahead of FOMC minutes; sterling rallies on Brexit poll

Posted on May 18, 2016 at 2:42 pm GMT

The US dollar picked up strength ahead of the release of the FOMC minutes of the April 26-27 Fed policy meeting. The dollar index reached an intra-day high of 94.99, a near one-month high. There are expectations that the minutes would appear more hawkish especially since the Fed statement after the conclusion of the latest meeting was less dovish and removed references to global economic and financial developments as an ongoing risk. Recently some Fed policymakers have been suggesting two [..]

Pound surges as latest Brexit poll puts ‘remain’ on 18 point lead

Posted on May 18, 2016 at 2:25 pm GMT

Support for Britain to stay in the European Union appears to be gathering pace as the fourth poll this week has put the ‘remain’ camp in the lead. According to the latest Ipsos MORI poll out today, 55% of respondents voiced their intention to vote for Britain to stay in the EU, compared to 37% who said they would vote for Britain to leave the EU. This gives the ‘remain’ camp an 18 point lead and follows the 15-point lead [..]

Japan GDP grows more than expected in Q1 but business spending falls

Posted on May 18, 2016 at 10:14 am GMT

Japan’s economy avoided a technical recession in the first quarter by expanding at a quarterly rate of 0.4% in the first three months of the year. After contracting by a downwardly revised 0.4% in the final quarter of 2015, some analysts had feared that the world’s third largest economy would enter its fourth technical recession (defined as two consecutive quarters of negative growth) since emerging out of the financial crisis. However, growth surprised on the upside as it beat expectations [..]

Asian Session – Dollar lifted by strong inflation and Fed comments; yen up on Japan GDP

Posted on May 18, 2016 at 7:38 am GMT

The dollar and the yen both headed higher on Wednesday as strong data boosted both currencies. Japan’s economy expanded by more-than-expected in the first three months of the year, data out today showed. First quarter GDP growth was 0.4% quarter-on-quarter, a significant improvement on the downwardly revised 0.4% contraction of the previous quarter and higher than the forecasts of 0.1% growth. However, analysts cautioned that the improved figures were mainly down to a jump in consumption as a result of [..]

Technical Analysis – GBPUSD maintains neutral bias around 1.44

Posted on May 18, 2016 at 7:03 am GMT

GBPUSD has a neutral bias in the short term, pivoting around the key psychological level of 1.44. During the past two weeks the pair has been trading within a range between 1.4331 and 1.4530. RSI is flat, hugging the 50 level, which is an indication of the lack of direction in the pair. In the bigger picture, GBPUSD was in an uptrend from 1.4004 to 1.4768 (April to May rise) and has retraced about 50% of this upleg. The market [..]

European Session – Dollar falls after US inflation data, focus turns to FOMC minutes

Posted on May 17, 2016 at 2:50 pm GMT

The main focus of the currency markets today was on inflation data from major economies, the UK and the US. For the UK, headline inflation came in at 0.3% year-on-year in April versus 0.5% eyed. This was well below the Bank of England’s 2% target suggesting that interest rates will likely remain stationary for the foreseeable future. Sterling dipped after the weak inflation data to $1.4453, after having risen to as high as $1.4523 earlier in the session, supported by [..]

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