Week in FX Americas – The Big Boys Are Back next Week: FOMC

Nothing is changing the investors view – next week’s FOMC meeting is likely to maintain the policy status quo. Many expect Helicopter Ben and his cohorts to reaffirm both elements of their current accommodation efforts, with forward guidance and the QE program unlikely to be changed.

Agreed, there has been some notable developments affecting the US economic outlook since January’s meeting, like this week’s unemployment claims and perhaps last week’s potential game changer, the NFP headline print. However, despite leading the G4 major economic pack, there remains a strain between these fundamental improvements and global lingering uncertainties that could create some problems. In reality, one employment benchmark does not make a job improvement trend consistent just yet. The fear of any imminent economic hindrances will have policy makers supporting financial conditions for a tad while longer.

The US 10-year yield rally is helping to support the “mighty’ buck, proving somewhat that the dollar is being brought largely on expectations of an end to QE. The EUR and Sterling’s late week ending surge has managed to whip some of the weak short dollar positions back-into-line. Mid-week’s US 10-year issue saw +47% of the +$21b auction being awarded to indirect bidders, a proxy for overseas interest. This is the highest foreign interest in over two-years. The reason why? Interest rates, 10′s trading through +2% improves foreign demand. This higher yield seems to be the markets psychological risk/reward threshold and a supporter for the “mighty dollar.”



* AUD RBA Policy Meeting Minutes
* GBP Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* GBP U.K. Chancellor Osborne Presents 2013 Budget to Parliament
* EUR German Producer Prices
* GBP Bank of England Minutes
* GBP Jobless Claims Change
* USD Federal Open Market Committee Rate Decision
* NZD Gross Domestic Product

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.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments.
He has a deep understanding of market fundamentals and the impact of global events on capital markets.
He is respected among professional traders for his skilled analysis and career history as global head
of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean
has played an instrumental role in driving awareness of the forex market as an emerging asset class
for retail investors, as well as providing expert counsel to a number of internal teams on how to best
serve clients and industry stakeholders.
Dean Popplewell