News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • Will be covering the Japanese #Yen to see how retail positioning could shape the outlook for $USDJPY, $AUDJPY and $EURJPY Starting in about 30 minutes! Signup for the session below:
  • Join @ddubrovskyFX at 20:00 EST/00:00 GMT for a webinar on what other traders' buy/sell bets say about price trends. Register here:
  • #BlackRock: We are neutral U.S. equities. We see U.S. growth momentum peaking and expect other regions to be attractive ways to play the next leg of the restart as it broadens to other regions, notably Europe and Japan $SPX $NDX
  • #BlackRock: The new nominal theme leads to a steeper yield curve expectation than market pricing. We see yields rising gradually, keeping us broadly underweight government bonds, particularly for longer maturities #trading $TLT
  • BlackRock: We are overweight European equities, and neutral Japan #trading
  • Gold prices face off with rising Treasury yields as jobs data approaches. Meanwhile, iron ore prices caught a small bid on bullish port activity out of China. Get your market update from @FxWestwater here:
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:
  • #Blackrock: We are moderately pro-risk and keep some cash to potentially further add to risk assets on any market turbulence #trading $SPX $RUT $DJIA
  • RT @BrendanFaganFx: Natural Gas Outlook: Price Continues to Soar as Severe Winter Shortage Looms $NG $NG_F Link:…
  • USD/CAD is set to snap a five-day sell-off with today’s rally breaking near-term downtrend resistance. Get your $USDCAD market update from @MBForex here:
Other Central Banks That Hate the Fed's Decision

Other Central Banks That Hate the Fed's Decision

Kathy Lien, Technical Strategist

The financial markets were disappointed by the Fed’s decision to postpone tapering, but so too were other central banks, which may now have to ease their own policies to combat fast-rising currencies.

Investors sold the US dollar (USD) aggressively on Wednesday, but less than 24 hours after the Federal Reserve decided not to taper asset purchases, the greenback recovered all of its losses against the Japanese yen (JPY) and is trading higher against the British pound (GBP).

Meanwhile, the euro (EUR), Swiss franc (CHF), New Zealand dollar (NZD), and Canadian dollar (CAD) all extended their gains, but the moves have been modest.

While the weakness in sterling can be attributed to softer UK data, the rapid-fire recovery in USDJPY may have caught some traders by surprise. New highs in the Nikkei helped to lift all of the JPY pairs, but the prospects for more stimulus from the Bank of Japan (BoJ) are also weighing on the currency. BoJ member Takahide Kiuchi said the central bank could be influenced by external factors such as market expectations, and will be forced to respond accordingly.

It should be no surprise that the actions of the Federal Reserve can have global repercussions. When Fed Chairman Ben Bernanke talked tapering in July, it drove global bond yields higher, creating a headache for other central banks.

Now, the decision to delay a reduction in asset purchases can also pose a problem for central banks including Japan, Australia, and New Zealand, which may have been banking on dollar strength to ease pressure on their own currencies. If those foreign currencies continue to strengthen versus the dollar, the central banks may have to offset the drag on the economy with easier monetary policies.

This morning's US economic reports were relatively good, which should support Bernanke's thesis that if the Fed keeps the QE pedal to the metal, the recovery should solidify and gain momentum. Manufacturing activity in the Philadelphia region expanded at its fastest pace since March 2011, while leading indicators rose 0.7%, and existing home sales grew 1.7%.

The country's current account deficit also narrowed to -$98.9 billion, its best level in 11 years. Jobless claims rose less than expected, but the Labor Department said the data continues to be distorted because two states are still working through a backlog of applications after computer system upgrades. In all, however, the data was better than expected, keeping the dialogue about Fed tapering this year alive.

UK Data Halts the GBPUSD Rally

Meanwhile, weaker UK retail sales data has made the British pound today’s worst-performing currency so far. Consumer spending dropped 0.9% in the month of August, and while the contraction in spending reported by the British Retail Consortium signaled that retail sales could be weak, few expected the largest decline in ten months.

The pullback in demand can be blamed on food sales, which soared in July, but plunged in August. If consumer spending fails to recover significantly in September, retail sales could subtract from GDP growth in the third quarter.

Considering that there are no major UK reports expected on Friday and none scheduled for release next week, the decline in consumer spending could cap GDP gains in the near term, or at least limit its rise relative to other currencies. However, if the UK PMI reports due the first week of October confirm that the recovery still underway, we could see renewed GBPUSD gains.

By Kathy Lien of BK Asset Management

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.