Forex Update, Tuesday, 15th of September, 2020
Japanese industrial production numbers were better than expected but the big story in Japan is the Liberal Democratic Party’s selection of Yoshihide Suga as Japan’s next prime minister. Suga appears to be a logical choice for the job and for a country that wants continuity.
The greenback traded lower across the board as investors position for dovishness from the Federal Reserve tomorrow. No major changes in monetary policy are expected but more confirmation on the FED new strategy to accommodate a higher period of inflation without having to raise interest rates
The recent forecast for further improvements in July data by ECB President Christine Lagarde has instigated the recent strength in the Euro. However, with only, a modest and gradual recovery in the Eurozone expected investors may have grown less optimistic about the outlook for the economy. If the ZEW survey which is due out later today falls more than expected, it could trigger the first decline in EUR/USD in 5 trading days.
Earlier today the UK posted better than expected Jobs data. This has given slight relief to the pound and could be overshadowed by the government's furlough scheme ending in October, ongoing Brexit disputes, and the ability to control Increasing Covid-19 infections.
The New Zealand dollar was the best performing currency today and, the Australian and Canadian dollars lagging. The rally was driven primarily by the government’s decision to ease restrictions in every major city except Auckland and to ease social distancing requirements for Air New Zealand.
This announcement overshadowed a report that service sector activity weakened. Second-quarter New Zealand GDP numbers are the most important piece of data for the country this week. Retail sales and consumer prices are due this week for the ‘Loony’ with August labor market numbers will be in focus for the ‘Aussie’ along with the minutes from the last Reserve Bank meeting released this evening.
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