In Europe it was a very upbeat session ahead of tomorrow’s Federal Reserve meeting as most bourses ended the day in the green territory. As for now, major indices in North America inch higher and US dollar is trading slightly lower.
In Asian session New Zealand’s dollar was the strongest currency extending its uptrend but markets ignored data from China showing declining auto sales.
During European session, Canadian dollar overtook the rest of the G10 currencies as Governor Poloz has done his part to support CAD in talking up the economy and also stating that interest rates have been extraordinarily low to offset shocks. Further comments from Poloz include "interest rate cuts have done their job" and "it’s no time to throw a party over the recovery". The standout remark here is the statement that rates have been "extraordinarily" low, which could be seen as pretty Hawkish.
Staying in the currency sector, British pound has won today’s battle being the most wanted currency as there have been several reports this afternoon that the Democratic Unionist Party (DUP) and the Conservatives are closing in on forming a coalition in the UK government. The pound has moved to its highest level of the day as the speculation continues to grow.
The main economic release of the afternoon has come from the US and shown a slightly higher rise in inflation than expected. Whilst the headline PPI M/M came in flat as forecasted the core reading rose by 0.3% (vs +0.2% exp). Whilst this isn’t a huge beat it still represents a bigger rise and given some suggestion that a fall in price pressures would weigh on Fed decision making today’s number has done nothing of the sort. The market reaction saw Gold prices fall to within a tick of their lowest levels of the month but then rebounded significantly.
In the Asian session we have an industrial production figures from China with market consensus at 6.4 percent. Ahead of the FED’s meeting tomorrow, we present you a 2 trading scenarios that every trader should be equipped with.