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USD: The claims data has stabilised of late, with the market expecting 340k gain after last week’s 343k. The data could help in establishing any dollar recovery, especially if weaker (lower) than expected.    See how to trade the US jobless claims with EUR/USD.

EUR: The ECB monthly report is usually not that interesting, but could be more of an event risk today should the ECB offer more detail on its decision to offer ‘forward guidance’ at this month’s meeting.

Idea of the Day

There was a notable turn around in the dollar overnight, thanks to comments from Fed Chairman Bernanke as well as the minutes to the June FOMC meeting.

The minutes were highlighting the conditionality of the Fed stepping back from bond purchases and the need for more signs of improvement of the labour market.

Meanwhile, the Fed Chairman stated that “Highly accommodative monetary policy for the foreseeable future is what’s needed in the US economy”. The reaction seen on the dollar reflects the extent of dollar long positions in the market, with stops triggered across the board in response to the two-pronged attack.

On the majors, it was the euro and Swissie that gained the most vs. the dollar.   For today, it’s a question of whether the market is capable of picking itself off the floor and building a long dollar base once again.

Latest FX News

AUD: Mixed messages from the jobs data, with headline employment rising by a greater than expected 10.3k, whilst the unemployment rate increased from 5.6% to 5.7%. Full-time employment fell, whilst part-time increased.   Aussie propelled to a two week high vs. the dollar, largely owing to dollar weakness from Bernanke and FOMC minutes.

JPY:  No new policy measures after the latest Bank of Japan meeting. As was anticipated yesterday, the ‘recovery’ word was mentioned for the first time since early 2011, although growth forecasts were cut a little.

GBP: Cable propelled back above the 1.50 level by the broad dollar weakness seen overnight.