With tomorrow's FOMC rate decision and statement looming, it was an understandably quiet day throughout Asia, with the exception of a quick dive in the Aussie dollar due to poor data. Australian retail sales came in worse than expected at -0.2% as opposed to the forecast of +0.5% and the move in AUD/USD was swift and dynamic. AUD/USD dropped almost 80 pips from 0.9040 to 0.8970 as the hopes of a December rate hike from the RBA seemed to get a bit further out of reach. The pair eventually bounced back near 0.9030 later in the day. AUD/NZD bottomed out at 1.2460, and then from there bounced to 1.2552 session highs. The NZD/USD hit early 0.7230 high and faded lower from there.
The trading today was light as mentioned, as traders await the FOMC statement to see if the key words, ''extended period'' will be uttered by Chairman Bernanke. The phrase in context would be ''The FOMC will continue to keep rates low for an extended period''. If that phrase is missing tomorrow, there will be action in the FX markets, conversely, if that phrase is spoken, there will be just as much action the FX markets. Regardless, tomorrow will be a pivotal day for the greenback.
With all of this to digest, the dollar was pretty steady in Asia, maintaining levels off of New York highs. EUR/USD eased through the day in a 35 pip range between 1.4700 and 1.4740. GBP/USD moves were languid as well, as the pair crawled between 1.6400 and 1.6440 for the day. The Aussie moves had little effect on its European counterparts as can be seen.
The Yen saw initial strength with risk aversion based on the poor data down under. EUR/JPY touched 132.50 on a 70 pip dip, and GBP/JPY fell by almost 80 pips to 147.80 on the yen buying. USD/JPY hit a 90.05 low, shedding 40 pips, but as the Aussie eventually rebounded, long yen positions were abandoned and the crosses were able to recoup lost ground by day's end.
As noted, the FOMC rate decision and subsequent statement is due up at 19:15GMT later in the day.
