The Morning Briefing is prepared daily at the start of the European Trading session by RTFX’s trading desk. It presents a roundup of the major news headlines occurring within the global economy that may affect the forex market. This news bulletin also includes a view of our forex calendar for the day, highs and lows achieved in the previous sessions from the forex market, global indices and commodities and brief commentary about the economic headlines.
Morning Briefing for Wednesday, 04 Apr 2012 (Updated 09:10:46 CET)Dollar rallies as expectations for QE3 diminish
Forex: Dollar lifted by FOMC minutes which suggested QE3 is some distance away
Global Markets: Global stocks hurt by diminishing hopes for more Fed easing
Australia: Records surprise trade deficit, AUD/USD to 11-week low
United States: FOMC minutes showed that appetite for more stimulus has waned
Euro zone: ECB rate decision and news conference scheduled for today
Forex rates in Asia and Indices:
EUR/USD: 1.3184 – 1.3239
USD/CHF: 0.9095 – 0.9135
GBP/USD: 1.5874 – 1.5918
USD/JPY: 82.58 – 82.94
EUR/CHF: 1.2037 – 1.2049
EUR/JPY: 108.96 – 109.70
DowJones: 13'199.55 -0.49%
NASDAQ: 3'113.57 -0.20%
S & P 500: 1'413.38 -0.40%
Nikkei: 9’819.99 -2.29%
Shanghai: 2’262.79 Closed
Gold: $ 1’644.90
Crude Oil: $ 103.53
The dollar rallied across the board yesterday, as the Federal Reserve’s FOMC minutes from the March meeting showed that appetite for further easing has diminished in the wake of an improving US economy. The minutes suggested that only “a couple of members” still feel more quantitative easing is needed.
Fed policymakers continue to focus on the still high jobless rate, but acknowledged signs of stronger growth. The greenback rose against a basket of its major rivals on Tuesday, jumping to its highest since March 26th versus the euro. A speech by Fed Chairman Ben Bernanke on March 26th had created a general feeling that QE3 was again on the table despite recent economic data showing signs of increasing growth. US and Asian shares fell following the minutes, and Europe is expected to open lower, as investors were hoping that more stimulus by the Fed could continue to spur growth.
EUR/USD dipped to 1.3184 on Wednesday, as it also got a boost from downbeat trade data from Australia which spurred broad selling of higher-yielding currencies and favored the ‘safe-haven’ buck. USD/JPY recovered from a 3-week low on Tuesday, rising to 82.99, but pared some of its gains on Wednesday and is down 0.20 percent to 82.65.
Data published overnight showed Australia posted a surprise trade deficit in February. The country recorded a deficit of AUD 480 million versus expectations for a surplus of AUD 1100 million. The Australian dollar was again under pressure following Tuesday’s sell-off after the Reserve Bank of Australia sounded more dovish in their monetary policy statement, leaving the door open for another rate cut in the next meeting.
The Aussie was down around 0.40 percent against its major rivals on Wednesday. AUD/USD fell more than half a percent to 1.0263, a 2-1/2 month low. Today, focus will shift towards the European Central Bank’s policy meeting. While rates are expected to remain unchanged, forex investors will be looking for more clues on further easing or on any exit strategies from long term funding operations which the central bank has embarked on in recent months.
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