Forex Trading TV Video Blog

The past week has been relatively light on news events from the US, and the USD pegged currencies mostly moved in a range with no ground breaking sharp movements. Yesterday the GDP revision was released inline with expectations at 4.0% for the annualized and 2.7% for the deflator. The House Price Index came in a bit lower than expected at 0.2% but caused no significant move.

Today will be a day packed with major news events, and traders should expect high volatility especially from the USD side of the board.
The first release at 12:30 GMT will be the Core Personal Consumption Expenditures -PCE Price Index which measures the rate of inflation experienced by consumers when purchasing goods and services, excluding Food and Energy. The forecast stands at 0.2% which is a bit higher than last month’s 0.1%. Next up will be Personal Income and Personal Spending where income is expected to remain unchanged at 0.4%, and spending is expected to rise a bit from 0.1% to 0.4%.
A bit later at 13:45 GMT the Chicago PMI is expected to be released. The index measures the health of the Chicago business environment. It’s derived from a monthly survey of purchasing managers where respondents indicate whether their organization’s activity is higher than, the same as, or lower than the previous month for output, purchases, employment, inventories, orders, and prices. An index reading above 50 indicates sector expansion. This month the expectations are for a slight decrease from 53.4 to 53.0. To finish the already busy schedule, the Fed’s Chairman Bernanke will start his speech on 15:00 GMT, where many people believe he will gently hint a possibility for a rate cut next month.

It is expected to be a very choppy trading day, especially around the releases time, and traders should pay close attention to violent price movements.

Yesterday the greenback continued on its bearish decent as it lost ground against most of the majors. Earlier in the week investors were expecting the FOMC minutes to give some indication as to when the Fed will cut rates, however the FOMC minutes did not reveal much and this created uncertainty in the market of whether the Fed is actually planning to cut rates. There was no significant economic news released from the US yesterday, so the bearish momentum that was created by the discrete FOMC minutes continued throughout yesterdays trading. The main market movement today can be attributed to the US equity markets rebound after Teusday’s large sell off. This caused the USD to weaken sharply against the high yielder’s as carry trades were back in action but on the other hand the carry trade winding caused the USD to gain some lost ground against the JPY, so it was not all doom and gloom for the greenback. The US markets sudden rebound yesterday can be attributed to the leaking of a letter by Fed Chairman Bernanke where he explicitly stated that the Fed is keeping a watchful eye on the financial markets and that it will intervene in order to mitigate the negative impact that the problems in the financial markets may have on the economy.

In US news today we are expecting the GDP annualized and deflator annualized figures which are forecasted to release at 4.0 % and 3.7 %, respectively. The previous quarters GDP annualized figure was 3.4 %, so we are expecting a 0.6 % increase in growth which would reaffirm the Fed’s view that the economy is expanding at a moderate pace. However these figures are not expected to cause any major movements and the source of today’s volatility will be the equity markets. The rebound in the US markets may spillover into Europe and Asia today, so if this occurs the carry trade resurrection will cause the greenback to depreciate against the high yielders but gain against the JPY. If the GDP figures do not surprise the market the greenback is likely to continue on its bearish path against the EUR and GBP, as there is no other data to give the USD some reprieve.