18 Jun 2014
BoE minutes, FOMC eyed - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, reviews the key events for Wednesday, with all the attention shifted to the BoE minutes first, and the FOMC outcome later on the day.
Key Quotes
"Last night's stronger than expected US CPI has raised the focus on the FOMC outcome later today. A run of good labour market news but contracting GDP growth at the start of the year see some further downgrades to participants' growth forecasts for this year, after the central tendency was revised down from 3.0% to 2.9% in March. Markets may be expecting a mild upward revision in inflation forecasts too. It's not clear whether such a mix would be enough to support the US$, though if the Fed were to accelerate the 'taper' program, then that could certainly get markets moving. So Yellen's press conference will be critical viewing (04:30am Syd), coming just after the all-important Australia v Netherlands World Cup match (02:00am Syd)."
"For Asia the focus will be on the USD/CNY fix, which has generally come in higher than market expectations in recent sessions. This has driven somewhat of a short squeeze in short USD positions against spot CNH and across the forward curve. This move was aided by the rise in US yields overnight, which produced broad based USD strength. A firmer US inflation picture should keep most USD/Asia pairs well supported in the near term. We will be wary of a break higher in pairs like USD/SGD, USD/MYR and continued weakness in INR and IDR."
"Data wise we have the revamped and reworked Australian leading index which continues to slide. We have Japanese trade data for May and we have real estate data in China, also for May."
Key Quotes
"Last night's stronger than expected US CPI has raised the focus on the FOMC outcome later today. A run of good labour market news but contracting GDP growth at the start of the year see some further downgrades to participants' growth forecasts for this year, after the central tendency was revised down from 3.0% to 2.9% in March. Markets may be expecting a mild upward revision in inflation forecasts too. It's not clear whether such a mix would be enough to support the US$, though if the Fed were to accelerate the 'taper' program, then that could certainly get markets moving. So Yellen's press conference will be critical viewing (04:30am Syd), coming just after the all-important Australia v Netherlands World Cup match (02:00am Syd)."
"For Asia the focus will be on the USD/CNY fix, which has generally come in higher than market expectations in recent sessions. This has driven somewhat of a short squeeze in short USD positions against spot CNH and across the forward curve. This move was aided by the rise in US yields overnight, which produced broad based USD strength. A firmer US inflation picture should keep most USD/Asia pairs well supported in the near term. We will be wary of a break higher in pairs like USD/SGD, USD/MYR and continued weakness in INR and IDR."
"Data wise we have the revamped and reworked Australian leading index which continues to slide. We have Japanese trade data for May and we have real estate data in China, also for May."