[B]Daily Fundamental Dose: 18-May-2016[/B]
Hello Traders,
Although US CPI rallied to the highest levels in almost a year, and helped the USD to gain a bit during initial trading after the data release, Fed’s preferred measure of Inflation kept remaining below 2.0% target rate which then reversed some of the USD gains. However, hawkish comments from three of the US regional Federal Banks’ Presidents, favoring a live chances of June rate hike together with nearly 2-3 rate-hikes during 2016, propelled the greenback towards completing a day in a positive side. The EUR remained as Trade balance details were not upto the mark while the GBP gained heavily as recent polls showed more people favoring the “Bremain” than the “Brexit”. Further, the AUD and NZD held their gains as absence of rate-hike signal in RBA meeting minutes, coupled with not so weaker NZ details and rising crude prices helped these commodity currencies; though, the CAD failed to strengthen as Canadian Manufacturing Sales dipped more than expected and worries also spread that recent wildfire cold provide greater damages to the Crude production.
Wednesday started with a good liquidity into the markets as Japanese GDP surprisingly rallied to the highest levels in a year and helped the JPY but failed to hold the gains as comments from the Chief Cabinet Secretary sound dovish and favored the delayed Sales Tax hike to take place in the current year. The Crude prices also maintained its up-move and rallied to seven months high on expectations favoring another dip in US stockpiles favoring already established views of short-term supply slack. The same moves helped the USD during earlier market hours while Gold and commodity currencies dropped.
Further, the UK jobs report and the US FOMC meeting minutes, coupled with US stockpile details, are likely to govern the market moves for the rest of the day. Even if the recent comments from some the US policymakers sound bullish lesser chances favor a hawkish tone in the minutes and can provide a pullback to the greenback; though, a surprise upbeat remarks can propel the USD’s upward trajectory. Hence, it would be better to remain supporting the USD ahead of the minute release, if already have long position, but should avoid taking new positions prior to announcement.
Have a nice trading-day…….