The Sterling against the Dollar was the standout climber with their BOE minutes more hawkish than expected. The Pound/Dollar once drew back to the 1.57 level after it temporally touched 1.5590. It is the first rise for Sterling Dollar in the last six days, during of which the pair lost 1.8%.
This is quite the feat when comparatively, we also saw the Dollar strengthen after the FOMC meeting minutes. Most of the committee felt that the impact from the global slowdown was fairly limited and should watch for the drop of price expectations.
The AUD and JPY were yesterday’s biggest losers to the USD. The Aussie/Dollar declined by more than 1% to 0.86 which we foresaw as written in yesterday’s wrap. A new round of falling has been confirmed. The pair may pull back to 0.8640 testing the breakout of this support, which may see a good entry level for technical traders.
The Yen refreshed its multi-year lower for the second time this week approaching the 118 level. We still see no signs of a cease in the Yen depreciation. The BOJ has decided to maintain the current monetary policy and 80 trillion Yen purchasing program. The Dollar Yen fell a little after the release. The central bank thinks the CPI will keep at its current level and the impact of the sales tax rise is subsiding.
PM Abe may win the re-election in December but the focus of market has moved to the world’s heaviest debt burden as half of the Japanese government spending flows to interest and pensions.
The Asian stock markets closed lower on Wednesday. The Nikkei Stock Average retreated by 0.32%. The Shanghai Composite fell by 0.22% to 2451. The ASX 200 closed by 0.57% lower to 5369. In the European stock markets, the UK FTSE was down 0.19%, the German DAX rose 0.17% and the French CAC Index gained 0.09%.
On the data front, China’s HSBC Flash Manufacturing PMI will be released at 12:45 AEDST. We will see the Euro area Flash Manufacturing PMIs at the beginning of the European session, along with UK Retail Sales at 20:30 AEDST. At midnight, US Unemployment Claims and CPI will be focused.
Have a great trading day!
Anthony
NB: Please note all references to rates above are approximate
To learn more about Anthony Wu, read here.