Forex Trading TV Video Blog

Yesterday’s trading session was characterized by low volatility due to a lack of any significant economic news events. As a result, the greenback saw small losses as it range traded against its major currency rivals. In U.S. share markets, a more consistent trend of bearish behavior took place as the NASDAQ fell by -15.60 points (-0.67%) whilst the Dow Jones was also down by -10.99 pts (-0.09%). Crude oil floated close to $100 a barrel last night, rising by just under $5 a barrel which contributed to the dollar’s mild reduction yesterday. The release of the NAHB homebuilder confidence index yesterday surprised the market by rising for the second straight month, though the figure is still below standards as it creeps towards lows seen last in the US recession of 1991. Looking ahead to today’s basket of US economic events, the 13:30 GMT release of Core CPI is expected to show at 0.2%, equaling last month’s result. Housing Starts figure, also to be released at 13:30 GMT are forecasted to return at $1.01 Million also on par with last month’s number. Building Permits are expected to return with identical numbers to last month’s 1.05 Million dollar figure. Wednesday’s US calendar will be wrapped up by the 19:00 GMT release of the FOMC meeting minutes as volatile conditions can be expected. The FOMC meeting is generally a good source of information regarding future polices regarding the dollar and interest rates. The January 30 FOMC meeting called for a vote regarding a 50bp rate cut for the dollar. If the aforementioned figures meet their expectations, Forex traders may interpret it as a positive sign in a relatively gloomy period for the US economy. In other dollar related news, ten-year bond yields rose overnight to a one-month high of 3.90% on inflation fears; a strong reading could threaten technical resistance by around 4% and open the door for a sharp move toward higher long-term interest rates around the world. Usually when a sharp positive movement in bond yields is expressed, the market atmosphere can be characterized as uncertain as traders could begin to seek low risk investment alternatives.

U.S. traders were off yesterday celebrating Presidents Day and there was no news or economic data to drive the move. By the end of the trading session, the USD was up 0.4% against the EUR, mainly as a result of position unwinding.
This week, inflation will be in focus as the U.S. consumers expect the rise in food and energy prices. Although the greenback edged higher yesterday, analysts estimate that the U.S. data releases may keep the pressure on the currency this week. Bernanke’s remarks and recent economic data have left investors betting on another half percentage point cut at the central bank’s March meeting. Futures contracts on the Chicago Board of Trade indicate traders see 74% likelihood the Fed will lower its benchmark rate by 0.5 percentage point at the next FOMC meeting. The rest of the bets are on a 0.75 percentage point reduction.
Today, the U.S economic calendar is relatively tame with only the National Association of Home Builders (NAHB) data providing any meaningful guidance to traders. NAHB index is measuring the demand outlook of single-family home builders. Also, during the day, the Minneapolis Fed President Stern is scheduled to speak about the U.S. economy at the Financial Planning Association of Minnesota. Traders scrutinize his speeches closely for clues regarding future monetary policy.
Traders may expect little major action in the U.S. currency till tomorrow, when the CPI report, Housing Starts and FOMC Meeting Minutes will be released. Overall, we expect bearish dollar sentiment will persist during the rest of the week.