Week in FX Americas – Fed Minutes Shows Appetite for Rate Patience

The EUR/USD started the week in a now familiar strong USD tune after a strong employment number the week before. The main event for the pair was the release of the minutes from the FOMC meeting two weeks ago. The actual minutes were more dovish than originally expected even after Chair Yellen’s press conference. A strong NFP fueled the expectation that the Fed would have seen the recovery coming. After the minutes the USD lost ground against all majors with the EUR/USD almost reaching 1.28.

The USD was able to regain some ground on the back of global growth forecasts cuts by the IMF and soft data out of Germany. The Canadian employment data provided the surprise of the week after crushing expectations of 20,000 new jobs with an actual 74,100 print. Sceptics will point out that Statistics Canada has reportedly erroneously in the past, and the Australian Bureau of Statistics the most recent example of expectation beating figures being way offside. For the moment CAD was boosted by the mostly full time job creation.

Global Growth
The International Monetary Fund, the World Bank and OECD have all cut growth forecasts for 2014 and 2015. Here divergence amongst recovering economies is clear. US and the UK lead the developed world with Europe and Japan stuck at a standstill. Emerging markets continue to struggle trapped between diminishing foreign direct investment that is going back to safe havens as major central banks make their move and geopolitical events unfold diminishing appetite for riskier investments.

Commodities
Stunted global economic growth has reduced the demand for all commodities. Base metals along with precious have lost as supply is way ahead of demand. Oil has been hit by slowdown of China and remains to be seen if the OPEC discounts trigger a price war, specially after the US has increased its productions due to technological advances. There is a lot of supply in the market and refineries are looking for cheaper crude.

Next Week For Americas:

North America and Japan have a short trading week with Monday being a bank holiday. China kick starts events with the release of their trade numbers on the weekend. Most of the week will be dominated by price reports from the U.K, China and Canada. By Tuesday, investors get to gage business and economic sentiment from Australia and Germany. On Wednesday, Draghi is due to deliver opening remarks at the 7th Statistics Conference in Frankfurt. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues. The US delivers key sales numbers, weekly claims and rounds off the week with consumer sentiment and Fed Chair Yellen speaking in Boston.

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