Forex news for January 28, 2015:
EURUSD takes a look below the 100 hour MA. USDJPY also moving lower. Stocks falling into the close
Canadian dollar falls to fresh 5-year low after Fed statement
- FOMC: Repeats it can be patient, will weigh international developments
- Fed: Inflation has declined and may decline further but should increase over the medium
- Full text of the FOMC statement Jan 28, 2015:
- Canada revises unemployment rate to 6.7% from 6.6%
- BOE’s Carney says UK rate hike path will be more gradual
- ECB’s QE increases risk of asset price bubbles says Buba’s Dombret
- ECB’s Linde says size of ECB stimulus package is ambitious
- FXCM will forgive 90% of clients with negative balances
- 96% of client funds are returned from Excel Markets collapse
- Germany expects Tsipras to present government strategy soon
- US oil inventories hit record
- S&P to enter $1.37B settlement with US govt
- Gold down $6 to 1286
- WTI crude down $1.66 to $44.57
- AUD leads, CAD lags
The forex market consolidated in quiet trading during the NY session as traders awaited the FOMC statement. That statement reiterated that the Fed “could remain patient in beginning to normalize” monetary policy. They acknowledged that inflation “has declined further” and moved below the “longer run objective”. However, that the declines largely reflected the recent declines in energy prices. For the first time they mentioned international concerns in the statement, specifically, saying that their future assessment will take into account “readings on financial and international developments”.
On the hawkish side, the Fed said that labor markets improved further with underutilization of labor resources “continuing to diminish”. They characterized economic activity as “expanding at a solid pace” Interestingly enough they said business fixed investment as advancing which flies in the face of the recent durable goods reports. Household spending they said was rising “moderately” and that the recent declines in oil prices has increased household purchasing power.
The EURUSD traded down then back up before the Fed statement. Later – perhaps with help from a dovish RBNZ statement that sent the NZDUSD tumbling sharply lower, the EURUSD was able to make new day lows and dip below the 100 hour MA
The USDJPY fell late in the day as stock prices tumbled to session lows. The Dow ended down -195 points, while the S&P (down 27.39), and the Nasdaq (falling 43 points) also hitting the late day skids. The USDJPY did bounce (once again) off the 7 day low area between 117.17 and 117.32. The low reached 117.24.
Oil prices continued to fall on the back of record inventories. Too much supply = lower prices and that trend continues for now. The USDCAD rallied to new highest level since March 2009. The 50% of the move down from the 2002 high to the 2006 low comes in at 1.2626. At 1.2521, that target is not that far away.
The NZDUSD is tumbling but I will save that for Eamonn’s far east summary (hint: the statement was dovish).
In today’s broker news, FXCM and Excel Markets said that 90% and 96% of customer funds would be returned. Good news for the retail forex traders.
