Forex headlines for July 29, 2014:
- Fed: Sees significant underutilization of labor resources
- Fed: Inflation has moved somewhat “closer” to long-run objective
- Fed repeats that accommodative policy to be appropriate for “considerable time” after asset purchase program
- Full text of the July 29 FOMC decision
- US Q1 advance GDP +4.0% vs +3.0% expected
- July 2014 US ADP employment report 218k vs 230k exp
- US GDP from 2011-2013 revised lower by an average of 0.2 percentage points
- German July CPI prelim m/m +0.3% vs +0.2% exp
- Q2 2014 US Core PCE prices 2.0% vs 1.9% q/q annualised
- June 2014 Canadian PPI -0.1 vs -0.1% exp m/m
- G7 leaders say they’re ready to ‘intensify the costs’ on Russia
- EU adds 8 people, 3 entities to sanctions over Ukraine
- ECB needs to wait and assess further developments before announcing further measures says ECB’s Bonnici
- Greenspan sees near-term US economic momentum continuing
- S&P 500 up 1 point to 1971
- Gold down $2 to $1296
- WTI crude down $1.40 to $99.60
- USD leads, JPY lags
The GDP report breathed life into the US dollar but the Fed took some of it away. In the end, no side finished the day with the definitive upper hand.
USD/JPY was the big winner on the day, gaining three quarters of a cent in a relatively orderly move. The gains started after the GDP report in a quick move to 102.50 from 102.20. It was a slow squeeze higher from there as the bond market took a battering and not long before the FOMC it traded at 103.00. Some profit taking knocked it back to 102.89 ahead of the FOMC and then the regular round of volatility hit on the FOMC and it spiked to 103.09 before falling back to 102.74 and closing near 102.86.
The dollar struggled to hold post-GDP gains elsewhere.
EUR/USD fell to an 8-month low of 1.3367 on the upbeat growth numbers from 1.3400 but climbed back after Yellen failed to give the hawks something substantial. Last at 1.3395.
Cable showed some interesting resilience. It was caught in the GDP move but fell less than other pairs. It held 1.6900 for a period then slipped to 1.6889. It later formed a double bottom there and springed back to 1.6918.
The commodity bloc continued to wilt. USD/CAD hit 1.0917 and AUD/USD hit 0.9304. They made some decent recoveries on the Fed but weren’t able hold those. That’s a sign of the times with many traders looking for commodity FX strength to sell.