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20 May 2015
Kiwi bulls take control in Asia, BOE & Fed Minutes Eyed
FXStreet (Mumbai) - The Kiwi emerged the stronger amongst the G10 currencies while the improved consumer sentiment in Australia pushed the AUD higher. The USD/JPY pair accelerated gains despite upbeat Japanese GDP figures as markets gear up for Fed minutes to be released later today.
Key headlines in Asia
Japanese Q1 GDP beats expectations
Japanese EcoMin defines contributors to Q1 expansion
Australia's May consumer sentiment surges. - Westpac
Dominating themes in Asia - centered on JPY, AUD, NZD
Broad yen weakness remained the underlying theme in Asia, despite a pickup in Japanese GDP numbers, which lifted the Asian equities. While the US dollar is seen in a consolidative mode and defends mild gains after rallying over 1% on Tuesday on better than expected US housing data.
The Kiwi remains the top gainer mainly driven by a short-covering rally after the recent weakness and as traders brace for NZ annual budget release tomorrow. The AUD/USD pair reversed previous losses and climbed higher after the Australian consumer confidence gauge rebounded into optimistic territory in May. While USD/JPY strives for 121 barrier as markets now await Fed’s minutes release for further momentum.
Heading into Europe - centered on EUR, GBP
Bank of England’s (BOE) Monetary Policy Committee (MPC) minutes and Fed minutes are likely to remain the main highlights in a rather data-light trading session.
Today’s publication of the BOE MPC minutes is expected to offer no surprise in voting composition among the nine-strong rate-setting committee as both external and internal price pressures remain significantly weak, leading to deflation in April. The UK slipped into deflation in April for the first time since 1960.
Later in the North American session, the much awaited Fed Minutes will be published at 18GMT. After an almost eventless Federal Reserve (Fed) meeting, the minutes from the April meeting will provide more details on officials' views about the deterioration in the data and how it impacted their rate hike plans.
Joseph LaVorgna from Deutsche Bank believes the minutes are likely to reinforce the Fed's official line that all meetings are "in play", but he doubts whether "this is the case in reality."
He adds, "We find it hard to believe that the Fed's first hike in interest rates in what will be nine years would be announced at a non-press conference gathering (July 31 & October 28). And, we doubt the Fed can hike in December because of the optics of doing so during the holiday shopping season, but more importantly, because financial markets are notoriously illiquid."
EUR/USD Technicals
Valeria Bednarik, chief analyst at FXStreet explains, "In the 4 hours chart, the Momentum indicator continues to head lower, despite in extreme oversold levels, whilst the RSI hovers around 31. The price stalled at the 61.8% retracement of the bearish run between February and March, around 1.1120, and buyers have surged around it ever since the price broke above it by the end of April. Should the decline extend below it, the slide will likely extend towards the 1.1000 figure, as bears will retake control of the pair."
Key headlines in Asia
Japanese Q1 GDP beats expectations
Japanese EcoMin defines contributors to Q1 expansion
Australia's May consumer sentiment surges. - Westpac
Dominating themes in Asia - centered on JPY, AUD, NZD
Broad yen weakness remained the underlying theme in Asia, despite a pickup in Japanese GDP numbers, which lifted the Asian equities. While the US dollar is seen in a consolidative mode and defends mild gains after rallying over 1% on Tuesday on better than expected US housing data.
The Kiwi remains the top gainer mainly driven by a short-covering rally after the recent weakness and as traders brace for NZ annual budget release tomorrow. The AUD/USD pair reversed previous losses and climbed higher after the Australian consumer confidence gauge rebounded into optimistic territory in May. While USD/JPY strives for 121 barrier as markets now await Fed’s minutes release for further momentum.
Heading into Europe - centered on EUR, GBP
Bank of England’s (BOE) Monetary Policy Committee (MPC) minutes and Fed minutes are likely to remain the main highlights in a rather data-light trading session.
Today’s publication of the BOE MPC minutes is expected to offer no surprise in voting composition among the nine-strong rate-setting committee as both external and internal price pressures remain significantly weak, leading to deflation in April. The UK slipped into deflation in April for the first time since 1960.
Later in the North American session, the much awaited Fed Minutes will be published at 18GMT. After an almost eventless Federal Reserve (Fed) meeting, the minutes from the April meeting will provide more details on officials' views about the deterioration in the data and how it impacted their rate hike plans.
Joseph LaVorgna from Deutsche Bank believes the minutes are likely to reinforce the Fed's official line that all meetings are "in play", but he doubts whether "this is the case in reality."
He adds, "We find it hard to believe that the Fed's first hike in interest rates in what will be nine years would be announced at a non-press conference gathering (July 31 & October 28). And, we doubt the Fed can hike in December because of the optics of doing so during the holiday shopping season, but more importantly, because financial markets are notoriously illiquid."
EUR/USD Technicals
Valeria Bednarik, chief analyst at FXStreet explains, "In the 4 hours chart, the Momentum indicator continues to head lower, despite in extreme oversold levels, whilst the RSI hovers around 31. The price stalled at the 61.8% retracement of the bearish run between February and March, around 1.1120, and buyers have surged around it ever since the price broke above it by the end of April. Should the decline extend below it, the slide will likely extend towards the 1.1000 figure, as bears will retake control of the pair."