DailyFX.com -

Talking Points:

  • US Dollar Uptrend Hangs in the Balance as Fed Policy Announcement Looms
  • British Pound May Not See Follow-Through on June BOE Minutes Pre-FOMC
  • Yen Edges Downward on Ebbing Haven Demand as Nikkei 225 Gains in Asia

The spotlight is on the Federal Reserve as the rate-setting FOMC committee delivers the outcome of its two-day policy meeting. This outing takes on particular significance in that it will be accompanied by the release of an updated set of policymakers’ economic forecasts as well as a press conference from Fed Chair Janet Yellen. As we’ve discussed previously, the fate of the Fed’s effort to “taper” QE asset purchases with an eye to end the program this year – paving the way for interest rate hikes – has been a formative catalyst for the markets this year.

US economic news-flow has broadly improved relative to consensus forecasts since early April but a recent string of disappointing releases have rekindled doubts about the strength of the recovery following dismal performance in the first quarter. Indeed, the US Dollar came under renewed selling pressure in June as traders scaled back bets on swift Fed policy normalization, putting the greenback’s multi-year uptrend in jeopardy.

For their part, FOMC officials have adamantly maintained that the first quarter was a hiccup in an otherwise supportive environment. If that sentiment is reflected in an upgraded set of economic forecasts and/or an upbeat Yellen presser, this dynamic may be overturned, sending the US unit broadly higher against its leading counterparts. On the other hand, a cautious tone that keeps alive the possibility that the central bank may yet rethink stimulus withdrawal stands to yield the opposite effect.

Minutes from June’s Bank of England policy meeting headline the calendar in European hours. Recent comments from Bank officials have signaled that a divergence of views on the timing of the first post-crisis interest rate hike is beginning to emerge, which Governor Carney suggested may occur sooner than markets expected. Confirmation of such hawkish leanings in the Minutes document is likely to offer a boost to the British Pound, while more reserved rhetoric may apply downward pressure. In any case, follow-through will probably prove limited before the FOMC announcement crosses the wires. Technical positioning hints GBPUSD may be topping.

The Japanese Yen underperformed in otherwise quiet overnight trade, sliding as much as 0.14 percent on average against the G10 FX majors. The move tracked an advance in Japan’s benchmark Nikkei 225 stock index, hinting ebbing haven demand for the safety-linked currency was the culprit behind the decline.

New to FX? START HERE!

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Current Account Balance (1Q)

1.407B

1.400B

-1.512B

22:45

NZD

Current Account Deficit/GDP Ratio (YTD) (1Q)

-2.8%

-2.8%

-3.4%

23:50

JPY

Merchandise Trade Balance Total (¥) (MAY)

-909.0B

-1189.3B

-811.7B

23:50

JPY

Adj. Merchandise Trade Balance (¥) (MAY)

-862.2B

-1030.5B

-880.5B

23:50

JPY

Merchandise Trade Imports (YoY) (MAY)

-3.6%

1.8%

3.4%

23:50

JPY

Merchandise Trade Exports (YoY) (MAY)

-2.7%

-1.3%

5.1%

23:50

JPY

Bank of Japan May Meeting Minutes

-

-

-

0:00

AUD

Conference Board Leading Index (APR)

-0.1%

-

0.0%

0:30

AUD

Westpac Leading Index (MoM) (MAY)

0.1%

-

-0.5%

1:45

CNY

MNI Business Indicator (JUN)

55.0

-

53.7

5:30

JPY

Nationwide Dept Store Sales (YoY) (MAY)

-4.2%

-12.0%

5:30

JPY

Tokyo Dept Store Sales (YoY) (MAY)

-4.3%

-10.8%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

Bank of England June Meeting Minutes

-

-

High

9:00

EUR

Eurozone Construction Output (MoM) (APR)

-

-0.6%

Low

9:00

EUR

Eurozone Construction Output (YoY) (APR)

-

5.2%

Low

9:00

CHF

ZEW Survey (Expectations) (JUN)

-

7.4

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3455

1.3506

1.3526

1.3557

1.3577

1.3608

1.3659

GBP/USD

1.6862

1.6913

1.6939

1.6964

1.6990

1.7015

1.7066

Related Articles
  1. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  2. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  3. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  4. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  5. Chart Advisor

    These 3 ETFs Suggest Commodities Are Headed Lower (COMT,CCX,DBC)

    The charts of these three exchange traded funds suggest that commodities are stuck in a downtrend and it doesn't look like it will reverse any time soon.
  6. Trading Strategies

    4 ETFs To Trade the Russian Ruble (RSX, ERUS)

    Discover which exchange-traded funds (ETFs) provide investors with the greatest exposure to the Russian ruble and learn about the risks that come with each.
  7. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  8. Products and Investments

    Are Dividend Stocks a Good Substitute for Bonds?

    Are dividend paying stocks a good substitute for bonds in a low interest rate environment?
  9. Mutual Funds & ETFs

    When Is the Right Time to Change From Mutual Funds to ETFs

    Find out how to determine when it's the right time for you to switch from mutual funds to ETFs, including the benefits of ETFs and who they are best for.
  10. Investing Basics

    An Introduction To Structured Products

    Structured products take a traditional security and replace its usual payment features with a non-traditional payoff.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center