US Dollar Dumped:
A big night for Forex markets overnight, with some HUGE moves across the board in US Dollar pairs. The USD was dumped left, right and centre with most of the majors posting close to 2% gains since yesterday’s trading session began.
“USD ADP Non-Farm Employment Change (205K v 193K expected)”
“USD ISM Non-Manufacturing PMI (53.5 v 55.1 expected)”
A slight beat in the notoriously unreliable ADP employment number was overshadowed by non-manufacturing ISM missing expectations. The ISM is viewed as a leading indicator for Friday’s NFP number and historically when this reading drops, so does the subsequent payrolls number.
Outside of the data sphere (which I hope some of you took advantage of with the instant release via instant access to the news terminal), it was the Fed’s Dudley who sent the USD into a spiralling nosedive with comments made to MNI.
“One thing I think we can say with more confidence is that financial conditions are considerably tighter than they were at the time of the December meeting.”
“So if those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision.”
The 4 interest rate rises in 2016 are being reassessed and repriced quick-smart by the market and that’s what we are seeing across USD Forex pairs.
The age old struggle between central banks and the free market:
USD/JPY Hourly:
Do we feel sorry for the Bank of Japan? Following the BOJ’s negative rates policy change, the central bank got some depreciation in the yen with that 300 or so pip hourly candle.
But since that day, USD weakness has chipped away any currency benefits that the BoJ had gained. Yesterday’s price action would have been excruciating to watch.
Chart of the Day:
Moving across to EUR/USD, the story here is a similar one.
EUR/USD Daily:
A couple of weeks ago we spoke about Mario Draghi: The Boy Who Cried Wolf, alluding to the fact that markets possibly didn’t share the same trust that the ECB will actually back up their talk about ‘taking action’.
How’s that race to the bottom going for you…?
On the Calendar Thursday:
AUD NAB Quarterly Business Confidence
EUR ECB President Draghi Speaks
GBP BOE Inflation Report
GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate
GBP BOE Gov Carney Speaks
Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and Australian Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.