U.S. Session Recap – May 21, 2014

  • CA wholesale sales drops by 0.4% in March vs. 0.4% uptick expected
  • Fed’s Plosser says the Fed may need to raise rates sooner than later
  • Fed’s Dudley expects a slow pace of tightening on the back of disappointing economic performance

The dollar’s performance was as mixed as a bag of nuts ahead of the FOMC statement. Speeches of FOMC members Plosser and Dudley gave a preview of how conflicted the group was over their tightening schedule. While both members see tightening in the future, Dudley was more cautious, hinting that sluggish performances in housing and business capital investment could slow down the pace of tightening.

USD/JPY’s drop found support at the 101.20 area before it stayed in a tight range for the rest of the session. EUR/USD and USD/CHF were also locked in tight intraday ranges with EUR/USD trading just below 1.3700 and USD/CHF trading just above .8900.

The pound continued to gain momentum from the U.K.’s stronger-than-expected inflation reading. GBP/USD visited the 1.6850 area as EUR/GBP slipped by around 20 pips to the .8125 zone.

Risk aversion continued to set the tone for the rest of the high-yielding currencies. Forex traders were still buying the low-yielding yen despite a couple of disappointing Japanese data. The Aussie, Loonie, and Kiwi also inched lower towards new intraday lows as investors price in the lack of rate hike speculations from the RBA and RBNZ.

Today we have Japan’s trade balance numbers, Australia’s Westpac consumer sentiment, and the BOJ’s monetary policy decision to look forward to. The two former reports have already been released but have shown limited impact ahead of the BOJ’s decision. Market players aren’t expecting the central bank to make any changes. Instead, watch out for optimistic remarks on the economy and maybe a little bit of jawboning from the BOJ members.

See also:

London Session Recap

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