Today at 12:30 GMT the Year-on-Year outcome for consumer inflation will be released in the US. Apart from jobs
figures, with which they are closely linked economically, these have the
greatest importance as an indicator of when the US Federal Reserve might embark
upon raising interest rates. This, in turn, is crucial for the fate of the US
dollar.
On the daily chart above, it can be
seen that the EURUSD pair has been oscillating between the psychologically
important 1.35 level and its 200 day Exponential Moving Average (EMA), waiting
for direction. The fact that many market participants are enjoying the holiday
season is probably one factor in this, but a rise in inflation later today will
get people’s attention as it will indicate that the recent very good US job
numbers just might be translating into a removal of the slack that has been
seen in the economy. Such a thing would be bullish for the US dollar and
therefore tend to send the EURUSD pair down through the support at 1.35. The
bias, such as it is, is to the downside in any event.
Stevens
speaks – and says little
All throughout the day yesterday,
Monday, the Aussie dollar against the US dollar trended lower, as can be seen
on the 30 minute chart above. There was a holiday in Japan, and that subdued
trading somewhat, but the market was expecting the governor of the Reserve Bank
of Australia (RBA), Glenn Stevens, to make a speech that would refer to the strength
of the Aussie, in an attempt to reduce it.
In the event Mr Stevens apparently devoted
his presentation to discussing, somewhat philosophically, the effectiveness or
otherwise of Quantitative Easing in major economies, such as the US and Japan,
before coming to the conclusion that it was far too early to say whether or not
it had worked at all in those countries, and others.
At the start of the Asian session
last night, the market reacted to the absence of any negative “jawboning” on
the Aussie, and sent it right back up again against the US dollar.
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