Daily Forex Fundamentals – November 19, 2013

European Session Recap

  • PBoC to stop yuan intervention?
  • German ZEW at 54.6 vs. 54.0 expected
  • Euro Zone ZEW at 60.2 vs. 63.1 expected
  • OECD lowers 2014 global growth forecasts from 4.0% to 3.6%

The PBoC made pips rain for the Aussie and the other high-yielding currencies when an article written by PBoC Governor Zhou Xiaochuan after the 3rd CPC plenum made the newswires.

The article hinted that the central bank would not only widen the yuan’s trading band, but also start working on setting up a managed floating exchange rate that would slowly take out the PBoC’s participation. As if the risk-friendly statement wasn’t enough, the USD was hit further by the announcement that the PBoC would cut the ratio of Treasury bonds that it holds to maturity. Yikes!

On the other side of the charts we saw the euro gave up some of its PBoC-induced gains after the region’s ZEW data just missed the analysts’ expectations. Of course, it also didn’t help that the Organisation for Economic Co-operation and Development (OECD) downgraded its 2014 growth forecasts. Heck, even GBP/USD dropped to 1.6059 at the news!

Up ahead we have a couple of Fed members with their speeches. Check out Forex Gump’s Fed guide if you want hints on their tones! Oh, and Obama is due to speak at 9:00 pm GMT so you might want to keep close tabs on that too.

Asian Session Recap

  • RBA still open to cutting rates
  • NZ inflation expectations up by 2.3% for Q4 2013 vs. 2.4% previous

The Asian session was pretty quiet for the high-yielding currencies with no news standing out from the Asian markets. The RBA caused a ripple on AUD pairs for a while after it revealed that while it believed it was prudent to hold its rates steady, it’s also not closing the door on more interest rate cuts. AUD/USD dipped to .9370 at the report’s release but is now trading close to .9420.

Over the next couple of hours we should watch out for the German and euro zone ZEW economic sentiment reports at 11:00 am GMT, followed by the U.K.’s 10-year bond auction sometime during the session. Also watch out for possible intraday reversals and retracements around the psychological handles.

U.S. Session Recap

  • Fed’s Dudley boosts the dollar
  • GBP, Comdolls decline from highs on U.S. equities price action

The dollar tried to recover some of its losses during the U.S. session when FOMC member Dudley hinted at positive growth projections. Unfortunately, the good vibes didn’t last until the Q&A session when he also pointed out that the Fed needs to see substantial improvement in the labor markets before they actually taper.

The pound and the comdolls also gave up some of their intraday gains after the U.S. equities failed to sustain their record high breaks. GBP/USD ended the day back at 1.6100 while NZD/USD stayed at the .8320 area.

Today’s Asian session reports include Australia’s CB leading index, which clocked in at 0.3% for September after August’s 0.2% decline. Up ahead is the RBA’s meeting minutes, which is expected to show a bit of pessimism to discourage more AUD gains.

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!

  • John

    Maybe some info on the Euro?

    • Pip Diddy

      Wrote a bit about the euro, buddy. Hope this helps!