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Forex: US Dollar Hoping to Find Reprieve in March FOMC Minutes

By , Currency Strategist
09 April 2014 03:40 GMT

Talking Points:

  • US Dollar Hoping for a Reprieve from March Fed Meeting Minutes
  • Pound, Euro Unlikely to Find Fuel in German and UK Trade Data
  • Aussie and NZ Dollars Higher, China Optimism a Possible Catalyst

The spotlight is on the release of minutes from the March 18-19 FOMC meeting in the hours ahead. That sit-down produced a notably hawkish shift in the central bank’s rhetoric and traders will be keen to parse through the conversation underlying policymakers’ confidence.Evidence pointing to QE cutback continuity can offer a lifeline to the US Dollar after prices dropped by the most in six months yesterday.

The economic calendar is quiet in European hours. February’s trade figures from Germany and the UK are on the docket, with marginal improvements on expected on both fronts. Absent substantial deviations from consensus forecasts, the outcomes seem unlikely to drive Euro and British Pound volatility given their limited implications for near-term ECB and BOE policy bets.

The Australian and New Zealand Dollars popped upward in otherwise quiet overnight trade. The catalyst may have been a larger-than-usual upward revision to the Chinese Yuan reference rate. The PBOC fixed the currency 0.06 percent higher, producing the largest increase in a month.

Beijing has frequently used the exchange rate as a monetary policy tool. In that context, today’s jump in the reference rate can be interpreted as a form of tightening. Markets may have treated this as a sign of confidence in China’s economic outlook, buying currencies of countries whose growth dynamics (and thereby interest rate expectations) are linked to the performance of the East Asian giant.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

NZ Card Spending - Total (MoM) (MAR)

-0.2%

-

0.6%

22:45

NZD

NZ Card Spending - Retail (MoM) (MAR)

0.0%

0.4%

0.9%

23:01

GBP

BRC Shop Price Index (YoY) (MAR)

-1.7%

-1.5%

-1.4%

0:30

AUD

Westpac Consumer Confidence (APR)

0.3%

-

-0.7%

0:30

AUD

Westpac Consumer Conf Index (APR)

99.7

-

99.5

1:30

AUD

Investment Lending (FEB)

4.4%

-

-3.7%

1:30

AUD

Home Loans (FEB)

2.3%

1.5%

0.0%

1:30

AUD

Value of Loans (MoM) (FEB)

1.9%

-

1.6%

5:00

JPY

BOJ Monthly Economic Report (APR)

-

-

-

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German Trade Balance (€) (FEB)

17.8B

17.2B

Medium

6:00

EUR

German Current Account (€) (FEB)

18.0B

16.2B

Medium

6:00

EUR

German Imports s.a. (MoM) (FEB)

0.1%

4.1%

Low

6:00

EUR

German Exports s.a. (MoM) (FEB)

-0.5%

2.2%

Low

8:30

GBP

Total Trade Balance (£, M) (FEB)

-2100

-2565

Low

8:30

GBP

Visible Trade Balance (£, M) (FEB)

-9200

-9793

Low

8:30

GBP

Trade Balance Non EU (£, M) (FEB)

-3400

-3990

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3632

1.3707

1.3752

1.3782

1.3827

1.3857

1.3932

GBP/USD

1.6400

1.6551

1.6649

1.6702

1.6800

1.6853

1.7004

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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09 April 2014 03:40 GMT