The US dollar advanced on positive expectations for the FOMC but soon gave up its gains and more when the statement disappointed. Instead of giving more details on their balance sheet reinvestment, the Fed simply said that the runoff would start “relatively soon.” Market participants also noted a slight downgrade in inflation assessment from “declined recently” to “declined” and “running below 2%”. US durable goods orders data is due next and weaker than expected reports could continue to dampen Fed rate hike hopes.
The euro took advantage of dollar weakness but was still in a weak spot against the commodity currencies. There were no major reports out of the euro zone yesterday, which explains the shared currency’s lack of direction. The Spanish unemployment rate and the German GfK consumer climate index are due today, with the latter expected to tick higher from 10.6 to 10.7.
The pound was able to hold its ground when the UK GDP reading came in line with estimates of 0.3% growth versus the previous 0.2% expansion for Q2. Components showed declines in industrial production and construction while the services sector posted 0.5% growth. CBI realized sales data is due today and a fall from 12 to 10 is expected.
The franc was mostly weaker against its peers, except against the dollar, even though data turned out stronger than expected. The UBS consumption indicator rose from 1.32 to 1.38 while the Credit Suisse Economic Expectations index surged from 20.7 to 34.7. There are no reports due from the Swiss economy today.
The yen was able to take advantage of dollar weakness but still chalked up losses to the commodity currencies. There were no major reports out of Japan but it looks like risk-taking had been in play and weighed on the lower-yielding currency. There are still no reports due from Japan today so market sentiment could push yen pairs around.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were mostly stronger against their peers, led by the Loonie which drew a strong boost from crude oil. The EIA reported a draw of 7.2 million barrels in stockpiles versus the projected reduction of 3.3 million barrels, marking a full month in falling inventories. Australian import prices data are due next and a weaker 0.7% uptick is eyed compared to the earlier 1.2% gain.