Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR and the GBP and was bullish vs. the JPY. The main news from the US economy revolved around the Consumer Price Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last month’s 0.3% mark. The Core Consumer Price Index was also slightly lower than last month’s 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the reports is that the Fed can now cut rates once again if needed, rather than worry about rising inflationary trends. This very understanding might be what reversed the USD bullish trend into a bearish one.
Today, an extremely intensive news day can be expected for the US economy. First off on the day will be the Empire State Business Conditions Index. The index measures the general business conditions of manufacturers in New York State. Although the survey is limited to New York only, it’s highly important as the New York Federal Reserve report serves as a precursor for national manufacturing numbers. Later on, the Treasury International Capital (TIC) Net Long-Term Transactions will be published. Analysts forecast it to release at 63.6B, well below last month’s 72.5B mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking Organizations. As always, Bernanke’s speeches are very intriguing, as clues regarding interest rate changes might be scattered throughout. Considering that analysts predict an interest rate cut to be imminent, this particular speech could be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published. Just like the New York Index, its importance derives from the fact that it’s released weeks before other major reports on manufacturing.
Today will be a fascinating day for traders, yet it obligates them to stay fully alert. For today, trading the USD could create significant profits as high volatility is expected throughout most of the day.
