• Kathy Lien, chief strategist at FXCM

    FXCM - In all likelihood, the central bank governor's more moderate comments about the outlook US economy is an excuse to keep monetary policy unchanged as it is too early to decide whether the US economy has indeed averted a more serious slowdown. The jump in gas prices is a major risk to consumer spending and it remains to be seen whether that will have a more serious impact on the overall economy. Since the economy is not strong enough to raise interest rates, the Federal Reserve and US Treasury hopes that an appreciation of the US dollar would help to curb inflation, but we believe that they will stop short of physical intervention.
  • Kathy Lien, chief strategist at FXCM

    FXCM - The Federal Reserve cut interest rates by 25bp to 2 percent, which was right in line with the market's expectations. However the US dollar sold off because the market was disappointed that the central bank did not give them more. This appears to be a classic buy the rumor sell the news type of reaction in the greenback since the statement was undoubtedly more hawkish than the one released in March.
  • John Kicklighter, junior currency analyst at FXCM

    FXCM - For the past two months, we have been unable to trade the Canadian retail sales report due to conflicting economic indicators that threatened to disrupt the reaction to the consumption indicators. In December, a monthly GDP number posed a modest threat to market movement and fundamental focus. The January release was certainly a no go through as the Bank of Canada was announcing a 25 basis point rate cut on the same day and at the same time as the retail sales report was scheduled to print. And, between these two fundamental pulls, a rate decision will win almost every time.
  • Terri Belkas, analyst at FXCM

    FXCM - This Thursday, the markets and the Bloomberg consensus of economists' forecasts agree that the BOE will enact a quarter point cut to the benchmark lending rate. However, looking at the data build up heading into the MPC's gathering, there is reason to factor in the risk of no change in policy. With GBP/USD holding above support, will the pair rally on the news?
  • John Kicklighter, junior currency analyst at FXCM

    FXCM - The Federal Open Market Committee's rate decisions have quickly become the top market moving event risk for the entire currency market. No long is the central bank's policy announcement merely a fundamental guide for the US dollar. Now the benchmark lending rate has ties to general risk trends (with an influence over the carry trade), global growth and the health of the credit market. Heading into the FOMC's January rate decision, conditions are very different from those for the October and December meetings.
  • Kathy Lien, chief strategist at FXCM

    FXCM - The US dollar got killed as today's comments from Federal Reserve President Ben Bernanke send expectations for a 50bp rate cut at the end of the month skyrocketing. We have kept you up to date with the day to day changes of rate cut expectations because they have shifted so dramatically over the past week.
  • John Kicklighter, junior currency analyst at FXCM

    FXCM - Whereas the Bank of England's monthly rate decision used to be overlooked in favor of the ECB's gathering (thanks predominately to the latter's news conference generating more event risk when both central bank's voted to keep rates unchanged), the tables have clearly changed for the benefit of pound traders. Similar to the situation last month, the market is heavily pricing in a quarter point cut to the benchmark lending rate, while the Bloomberg consensus of economists' forecasts is calling for no change. If there is another lowering of the overnight rate, it would be the first back to back cut since the BoE aggressively loosened monetary policy after the terrorist attacks in New York in September of 2001.
  • John Kicklighter, junior currency analyst at FXCM

    FXCM - Looking back over the market's reaction to the last three retail sales reports from Canada, it is clear that there needs to be more at work than a mere surprise between the actual number and the official forecast to trade this event risk successful. One consideration that has proven its influence on the reaction to the retail sales gauge in the past is the wholesale report. For September, the wholesale report could have a modest impact on its retail counterpart as the former rose 1.1 percent versus expectations of no change and a 1.9 percent drop in the previous month.