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.

Fore more market moving events visit the MarketPulse Economic Calendar

WEEK AHEAD

* GBP Core Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* CNY Consumer Price Index
* USD Advance Retail Sales
* CAD Bank Canada Consumer Price Index Core
* USD U. of Michigan Confidence

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza