Forex: Wednesday's review
The dollar was mixed against its most-traded counterparts before minutes of the Federal Reserve’s last meeting are released today.
The euro fluctuated against the dollar amid shifting investor appetite for riskier assets as U.S. stocks swung between gains and losses.
Sterling fell against all of its 16 most-traded counterparts as minutes of the British Bank of England’s May 5 meeting showed most policy makers said higher interest rates might hurt the recovery. New Zealand’s dollar was the best performer against the greenback after the nation’s producer prices and consumer confidence increased.
FOMC Minutes show active discussion of exit strategy, with "a range of views" but agreed this "did not mean that the move toward such normalization would necessarily begin soon." Some said need to be prepared to tighten later; a few wanted action later this yr;FOMC agreed no action in the end. Most preferred once asset sales are appropriate, "such sales should be put on a largely predetermined and preannounced path; however, many of those participants noted that the pace of sales could nonetheless be adjusted in response to material changes in the economic outlook. Several other participants preferred instead that the pace of sales be a key policy tool and be varied actively in response to changes in the outlook. A majority of participants preferred that sales of agency securities come after the first increase" in FF target. Many wanted to return SOMA to all Tsys "perhaps over 5 yrs." More gradual asset sales might allow an earlier FF rate hike. Most prefer returning to FF target, talked about a corridor target system of IOER low/DR top.
EUR/USD: the pair bargained within the limits of $1,4190-$ 1,4280.
GBP/USD: on results of yesterday's session the pair decreased in around $1,6170.
USD/JPY: the pair grown in around Y81,70.
UK data again dominates the morning releases in Europe with retail sales for April released at the same time as SMMT Car Production data. The retail sales are expected to post a rise of 0.8% m/m, 2.4% y/y with core retail sales up 0.6% m/m, 2.1% y/y. UK data continues at 1000GMT with the May CBI Industrial Trends data, which is expected to see the orders balance edge up to -10.
US events, including data releases start at 1230GMT when New York Fed President William Dudley delivers a speech on economic conditions and the outlook at SUNY New Paltz, the first of two days of events throughout the Hudson Valley. At the same time, initial jobless claims are expected to fall 9,000 to 425,000 in the May 14 employment survey week, up 21,000 from 404,000 level in the April 16 employment survey week. The weekly Bloomberg Comfort Index is due at 1345GMT, while data continues at 1400GMT with the Philadelphia Fed Survey, Existing Home Sales from the NAR and also the latest Leading Indicator data. The Philadelphia Fed index is expected to rise to a reading of 22.0 in
May after plunging to 18.5 in April, while existing home sales are expected to rise to a 5.2 million annual rate in April from 5.10 million in March and the index of leading indicators is forecast to hold steady in April.