The U.S. Dollar was more or less unchanged on Wednesday as all eyes were on the Federal Reserve, which is slated to release the minutes from its June policy meeting. But as the morning progressed, the greenback inched higher against a few of the majors including the Yen. A vast number of economists predicted that despite positive news showing progress in the Jobs sector, policy makers would not feel that the time is right to determine when they will raise the costs of borrowing money. Gold Prices went up on the Comex as the weakening of the greenback and stocks boosted demand for the precious commodity. Economists say that Gold has risen in the past few months as a result of geopolitical tensions, including the crisis between Russia and the Ukraine, the fighting in Iraq, and now the escalating violence between Israel and the Palestinians. And with concerns over the stability of the U.S. economy, Contracts for delivery in August rose 0.7 percent to $1,325.20 a troy ounce during the morning hours in New York, and it surged to $1,327.00 a troy ounce during the European market hours.
The Euro appreciated against the U.S. Dollar as investors shied away from the greenback ahead of the Federal Reserve’s release of the minutes. The economic calendar has been light, though reports out of Germany showing improvements in the Trade Balance helped bolster the Euro. The British Pound slumped against the greenback but hovered above $1.7000 even though Tuesday’s economic news revealed that Industrial Production has declined, and Factory Output plummeted, factors which brought into question the stability of the U.K.’s economy.
The Yen depreciated against a vast number of its counterparts. Sources have indicated that Japan may intervene in the market to debase the currency, as the Yen has rallied 3.7 percent since December. The Yen was little impacted by macroeconomic fundamentals out of China showing that Consumer Prices climbed 2.3 percent last month, below the anticipated 2.4 percent, while Producer Prices slipped 1.1 percent, denoting that the country is still facing deflationary pressures.
Lastly, in the South Pacific, Australia reported a hike in Consumer Confidence, causing the Aussie to rally versus the U.S. Dollar; but gains were limited as China announced that its Consumer Prices went up at a slower pace than predicted. The New Zealand Dollar came within 0.5 percent of a record high against the greenback as the markets awaited the publication of the Federal Reserve’s policy meeting minutes. Market traders await today’s announcements out of China which are expected to show that exports may have increased 10.4 percent in June, prompting the Trade Balance to post a surplus of $37 billion.
EUR/USD- Traders Prefer The Euro
The EUR/USD inched to the upside as investors sought the Euro over the greenback ahead of the release of the Federal Reserve’s policy minutes. The pair inched slightly above $1.3600 as the markets waited for the Fed’s minutes, and anticipated a speech which Mario Draghi, the European Central Bank’s President was scheduled to deliver. The EUR/USD got off to a positive start as Germany reported improvement for the Trade Balance with a surplus of 18 billion Euros. However, other releases indicated that Retail Sales, Manufacturing and Employment weakened in the region’s largest economy, adding to concerns that the Euro-zone’s economic recovery may be at risk.
GBP/USD- Weak Data Hurts Sterling
The GBP/USD slumped after Tuesday’s releases disappointed the markets as they showed a drop in the Manufacturing sector, denoting that the economy’s recovery may not be as solid as believed. A number of investors have indicated that the dramatic appreciation of the GBP/USD could be negative for the U.K.’s economy. Economists explained that when the GBP/USD reached the highest level in six years weeks ago, reports revealed that shop prices dipped by the most since 2006; and the gauge which measures inflation expectations fell to the lowest level in three months, signaling that the currency’s strength could impair growth in the future. The pair has remained strong on speculation that the Bank of England could boost the interest rate. Later in the day, the GBP/USD erased some of its losses.
AUD/USD- Aussie Bolstered By Confidence
The AUD/USD traded little changed after rallying on news indicating that Consumer Confidence rose in July, from 0.2 to 1.9 percent. The pair slipped slightly once China announced that its Wholesale Prices continued to post at deflationary levels, while the annual Consumer Inflation rose in June. According to official announcements, the Consumer Price Index ticked up 2.3 percent from a year ago, but came in below the predicted 2.4 percent. In the South Pacific nation, it is a fact that the survey denoted a hike in consumer sentiment; however, the Chief Economist for Westpac, Bill Evans said that the release of the federal budget is still weighing on confidence, thus the reason why the index is still posting below the level of optimism.
EUR/JPY- Yen Dips After Stocks Fall
The EUR/JPY gained as the Yen depreciated following a drop in stocks. In Japan, the monetary authorities are expecting the depreciated currency to help the economy, since exports continue to lag. The latest metrics have shown that shipments are still at the same level as they were in 2012, when Shinzo Abe took office as Prime Minister of Japan.
Today’s Outlook
Today’s economic calendar shows that the E.U. will release French CPI and Industrial Production as well as the ECB’s Monthly report. The U.K. will publish the Interest Rate Decision and BOE’s QE Total. The U.S. will announce Initial and Continuing Jobless Claims. New Zealand will post FPI. And Australia will provide data on Home Loans.