News Column

Forex: US Dollar May Rise on Pre-Positioning Before FOMC Minutes

February 18, 2014

Ilya Spivak

Talking Points:



  • New Zealand Dollar Underperforms After Comments from NZ FinMin English
  • Yen Sold on BOJ Rate Decision, Pound Down as Soft CPI Dents BOE Outlook
  • US Dollar May Rise as the Markets Ponder Upcoming FOMC Minutes Release



    The New Zealand Dollar underperformed in overnight trade, sliding as much as 0.5 percent against its top counterparts. The selloff comments from New Zealand Finance Minister Bill English, who said he agreed with a widely-circulated research piece from Stephen Jen of SLJ Macro Partners - a hedge fund - that argued the Kiwi was highly overvalued. English rejected Jen's assertion that the island nation's structural problems mirror those of Ireland in 2007 that ultimately pushed that country into an EU assistance program amid the Eurozone debt crisis.



    The Japanese Yen likewise faced selling pressure following the BOJ monetary policy announcement, where the central bank announced an extension of its lending facilities. The British Pound ticked lower after January's UK CPI report showed the headline year-on-year inflation rate unexpectedly ticked down to 1.9 percent, the lowest since November 2009. Sterling tracked UK bond yields lower, hinting the outcome weighed on Bank of England policy expectations and pushed out investors' perceived timeline for when the central bank would begin to raise interest rates.



    Looking ahead, a quiet US economic calendar may open the door for investors to consider larger thematic forces ahead of tomorrow's publication of minutes from January's FOMC meeting. As we discussed in detail yesterday, the report may mark the beginning of a reversal for the US Dollar. The greenback has faced heavy selling pressure in recent weeks amid what appeared to be an unwinding of EM-driven risk aversion. The currency may find a lifeline however if a relatively hawkish tone from Fed officials reaffirms their commitment to the QE "tapering" process. Such rhetoric has scope to sink sentiment anew given a backdrop of recently disappointing US economic news-flow.







    Asia Session



    GMT

    CCY

    EVENT

    ACT

    EXP

    PREV

    0:30

    AUD

    RBA February Meeting Minutes

    -

    -

    -

    1:16

    CNY

    Foreign Direct Investment (YoY) (JAN)

    16.1%

    2.5%

    3.3%

    2:28

    JPY

    Bank of Japan Interest Rate Decision

    -

    -

    -

    2:28

    JPY

    BOJ 2014 Monetary Base Target

    270T

    270T

    270T

    6:00

    JPY

    Machine Tool Orders (YoY) (JAN F)

    40.3%

    -

    39.6%





    European Session



    GMT

    CCY

    EVENT

    ACT

    EXP

    PREV

    9:00

    EUR

    Eurozone Current Account n.s.a. (E) (DEC)

    33.2B

    -

    27.2B

    9:00

    EUR

    Eurozone Current Account s.a. (E) (DEC)

    21.3B

    -

    23.3B

    9:30

    GBP

    CPI (MoM) (JAN)

    -0.6%

    -0.5%

    0.4%

    9:30

    GBP

    CPI (YoY) (JAN)

    1.9%

    2.0%

    2.0%

    9:30

    GBP

    Core CPI (YoY) (JAN)

    1.6%

    1.9%

    1.7%

    9:30

    GBP

    RPI (MoM) (JAN)

    -0.3%

    -0.4%

    0.5%

    9:30

    GBP

    RPI (YoY) (JAN)

    2.8%

    2.7%

    2.7%

    9:30

    GBP

    RPI ex Mort. Int. Payments (YoY) (JAN)

    2.8%

    2.7%

    2.8%

    9:30

    GBP

    PPI Input n.s.a. (MoM) (JAN)

    -0.9%

    -0.4%

    0.2%

    9:30

    GBP

    PPI Input n.s.a. (YoY) (JAN)

    -3.1%

    -2.9%

    -1.0%

    9:30

    GBP

    PPI Output n.s.a. (MoM) (JAN)

    0.3%

    0.0%

    0.0%

    9:30

    GBP

    PPI Output n.s.a. (YoY) (JAN)

    1.2%

    0.7%

    1.0%

    9:30

    GBP

    PPI Output Core n.s.a. (MoM) (JAN)

    0.5%

    0.1%

    0.1%

    9:30

    GBP

    PPI Output Core n.s.a. (YoY) (JAN)

    0.9%

    0.7%

    1.0%

    9:30

    GBP

    ONS House Prices (YoY) (DEC)

    5.5%

    6.0%

    5.4%

    10:00

    EUR

    German ZEW Survey (Curr. Situation) (FEB)

    50.0

    44.0

    41.2

    10:00

    EUR

    German ZEW Survey (Econ. Sentiment) (FEB)

    55.7

    61.5

    61.7

    10:00

    EUR

    Eurozone ZEW Survey (Econ. Sentiment) (FEB)

    68.5

    -

    73.3





    Critical Levels



    CCY

    Supp 3

    Supp 2

    Supp 1

    Pivot Point

    Res 1

    Res 2

    Res 3

    EUR/USD

    1.3634

    1.3670

    1.3689

    1.3706

    1.3725

    1.3742

    1.3778

    GBP/USD

    1.6490

    1.6617

    1.6666

    1.6744

    1.6793

    1.6871

    1.6998














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    Source: DailyFx


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