Another soft US durable goods orders report may leave the Fed with second thoughts about a hawkish bias. The pound was the top performer while the dollar was generally softer and the Japanese yen lagged. The Australian CPI report and another round of US primaries are due later. There are currently 6 Premium Trades in progress, 3 of which are in profit (one includes AUD), 2 in a loss and 1 at breakeven. Today's Premium video focusing on FX trades & charts pre-central banks is posted below.
US durable goods orders have struggled for two years and the March report once-again raised doubts about the economy. Overall orders were up 0.8% compared to 1.8% expected and the core measure was flat compared to +0.6% expected. The misses were compounded by small downward revisions to the February data.
The US dollar came under immediate pressure after the release. EUR/USD eventually hit 1.1339 from 1.1275 before the release. Later in the day the pair retraced all the gains, likely on Fed speculation.
There is major indecision about what the Fed could signal Wednesday. Fed funds futures are pricing in just a 19.6% chance of a hike. One reason they could wait is uncertainty about the Brexit vote, which is a week after the June 15 FOMC.
The 'leave' side got a boost Tuesday with a new poll showing them with a slight lead. The market sensitivity to the numbers is growing and cable immediately fell 35 pips on the headlines.
Other US economic data was mixed. The Richmond Fed was at 14 vs 12 expected. Consumer confidence improved to 94.2 but not as much as the 95.8 consensus. The Markit services PMI was at 51.1 vs 52.0 expected.
The Fed gets the advance trade balance report but it's unlikely to make a difference in deliberations. The data in Q1 has been weak but worries about global financial conditions have certainly ebbed. Resource prices will boost inflation as well.
The Fed wants the opportunity to hike in June and a less-dovish statement tomorrow is a pre-requisite. However, there is a chance they punt on the decision for another six weeks because of worries about unsettling stock markets.
Other central banks are struggling with similar dilemmas. The RBA will be closely watching Q1 CPI data due at 0130 GMT. The consensus is for a 1.7% y/y rise and a 2.0% y/y climb in the trimmed mean. Look for a significant AUD reaction to any miss.
At 0430 GMT, the BOJ will be watching the Feb all industry activity index. Their decision is due about 11 hours after the Fed and may depend on the signals Yellen sends.
The final set of events to watch are Republican primaries in Connecticut, Delaware, Maryland, Pennsylvania and Rhode Island. The announcement of mild cooperation by Kasich and Cruz this week to deny Trump the nomination could get uglier before it gets better.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.