Never miss a story from Ilya Spivak

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Ilya Spivak

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

TALKING POINTS – US DOLLAR, FOMC MINUTES, BRITISH POUND, BREXIT

  • US Dollar may rise as FOMC minutes stoke risk aversion, haven demand
  • British Pound on alert as UK PM May meets with EC President Juncker
  • Yen down as APAC stocks edge higher, NZ Dollar falls after dairy auction

A quiet offering on the European economic data docket is likely to see traders looking ahead to focus on minutes from January’s FOMC meeting. The policy statement and press conference unveiled after that gathering marked a notable dovish shift in official rhetoric, endorsing the late-2018 drop in priced-in rate hike bets. Markets expected two hikes as of November. By the turn of the year they foresaw none.

A darkening outlook for global growth seemed to be the culprit behind this adjustment. Indeed, the expected policy path implied in Fed Funds futures dropped alongside the bellwether S&P 500 stock index, a benchmark for the broad-based markets’ assessment of global economic prospects. Interestingly, the US Dollar held firm as rates-based support unraveled, underpinned by safety-seeking capital flows.

This might foreshadow a somewhat counter-intuitive response if the Minutes document echoes officials’ newly defensive disposition. With traders now seemingly convinced that rate hikes are off the menu through 2019, there might be relatively little room for further dovish re-pricing to weigh on the Greenback. If the central bank’s worried tone stokes slowdown fears however, haven demand might nudge it upward.

BRITISH POUND EYEING JUNCKER, MAY MEETING

The British Pound is waiting with baited breath after yesterday’s spirited rally as UK Prime Minister Theresa May prepares to meet with European Commission President Jean-Claude Junker. London is reportedly looking for a “significant” meeting that breaks ground on resolving the so-called “Irish backstop” hurdle to a Brexit deal. Mr Junker was more circumspect, saying he isn’t expecting any new developments.

YEN DOWN IN RISK-ON APAC TRADE, NZD DOWN AFTER DAIRY AUCTION

The Japanese Yen faced a familiar headwind as most Asia Pacific stock exchanges rose, driving underperformance against the standby anti-risk currency’s G10 FX counterparts. The typically sentiment-sensitive New Zealand Dollar also fell however, diverging from the risk on/off narrative. The average price of milk powder fell for the first time in three months at auction, which may have helped drive selling.

What are we trading? See the DailyFX team’stop trade ideas for 2019 and find out!

ASIA PACIFIC TRADING SESSION

Asia Pacific Trade Economic Calendar

EUROPEAN TRADING SESSION

Europe Trade Economic Calendar

** All times listed in GMT. See the full economic calendar here.

FX TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter