Coming Up Today (all times GMT)
- GBP MPC Minutes (9:30)
- USD New Homes Sales (15:00)
- Crude Oil Inventories (15:30)
- USD FOMC Meeting (19:15)
- NZD Interest Rate Meeting (20:00)
Overnight trading was dominated by US President Obama's State of the Union Address. The speech was dominated by talk of government spending freeze and deficit reduction. The news though did little to strengthen the Dollar, as US Treasury yields dropped, and sapped demand for the Greenback. Overall, the effects on the Forex marketplace of President Obama's speech may be short lived, as Forex traders turn their eyes to today's FOMC Meeting. Expectations for a rate hike soon are near zero, however traders will be watching for any indications whether the Fed is planning to expand its $600 billion QE policy. If the Fed states that their current actions are working, this could signal that they won't increase QE and may lead to Dollar strength following the meeting.
The EURUSD continues to flex its muscles, driving Euro short sellers to ponder whether to bring kryptonite to stem the rally. Yesterday, the EURUSD once again shook off early weakness and traded to another three month high of 1.3705 before settling around 1.3680. Following the State of the Union address the EURUSD has been hovering just below 1.3700 and be poised for another breakout if it surpasses the 1.3705 level.
The GBPUSD took a bit hit yesterday as a worse than expected GDP figure caused the pair to crash. The GBPUSD hit a low of 1.5760 after trading around 1.6000 earlier in the day. Looking ahead Forex traders will now be watching today's MPC Minutes. With UK inflation rising, Forex participants have been factoring a greater chance that the BoE will raise rates sooner than later, therefore, traders will want to see saw evidence of this potential within the Minutes. As such, if it is revealed that BoE members are against any immediate tightening, the GBPUSD could continue its fall.