FX Market Calm before the Policy Storm

By: DailyForex.com

FX markets were relatively benign as traders await the outcomes of several key policy meetings across the globe. Most importantly among them, trades are waiting to hear what the Bank of Japan and the US Federal Reserve Bank might next decide in terms of interest rate decisions. In the short term, however, it is the Bank of Japan announcement tomorrow that will drive the Japanese Yen’s short term direction. Given the difficulty in stabilizing inflation in Japan, analysts believe that the BoJ is likely to announce further easing measures. To a lesser extent, tomorrow’s release of minutes from the Reserve Bank of Australia’s latest policy decision could weigh on the Kiwi Dollar.

As reported at 9:51 am (GMT) in London, the USD/JPY pair was trading at 113.5850, down 0.12% in a daily range of 113.5085 Yen at the bottom and 114.0250 at the top. The EUR/JPY was down 0.39% to trade at 136.38 Yen. The AUD/USD was trading flat at $0.7545; the pair has ranged from $0.7520 to $0.7594 in today’s trading.

Retail Sales Looms

The Fed rate decision is not due until Wednesday; however, ahead of that is tomorrow’s release of US Retail Sales figures. Consumer spending accounts for the bulk of US economic growth, and any positive news on the retail sales front could provide valuable input as to the possible timing of the Fed’s next rate hike. A disappointment could mean that the Fed might wait for further evidence of sustained growth. On the other hand, an upbeat accounting could put a rate increase back on the table in the short term.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.