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Currency analyst

Morning briefing: what we have been through and what to expect from this day

FOMC, RBA and RBNZ recap

Now, when tensions defused and the dust settled, we can take a deep breath. In the past 24 hours we heard Yellen, Lowe, Wheeler speaking of the health of their national economies and economic projections. Let’s review their speeches and then turn to the occurrences of this day.

The Fed left interest rates unchanged, but there is gleam of hope, that the board will be hawkish at the next meeting (November 2nd). Well, we won’t do any projections in this respect; likelihood of this occurring will be entirely dependent upon further economic data going forward. It seems that for the FOMC perfectionists there's always something to strive for. Even now, when the US labor market continues to strengthen, economic growth has picked up from its baby steps seen in the first half of this year, and inflation running 2%, they managed to find a room for improvements. Who knows, what happens in November, the cautious Fed might not agree for a rate hike waiting for the results of another major event – the US Presidential elections.

RBNZ also decided to leave the official cash rate unchanged, echoing its forethoughtful colleagues. But there was a slight dovish lean in the statement of the RBNZ’s Governor. The further easing will be required, according to Wheeler, to give an impulse to the NZ’s economic growth, and high NZD hinders this process.

RBA Governor Lowe said nothing new to surprise or scare the market. The Bank, struggling to survive in the world of low interest rates, is not going to rise in the nearest future, as low wage inflation and weak commodity prices exhibit additional pressure on the economy.

How this affected the currency pairs:

USD/JPY tested a little lower, but didn't manage to reach 100, then it bounced back to just under 100.50.

NZD/USD experienced small changes with little news and no developments to impact. It dropped from the 0,73480 high today to the 0,7330 level.

EUR/USD currency pair has risen slightly today to the 1,122 level, but still didn’t come through big changes since yesterday.

Aussie grew in value a little bit and almost reached the 0,765 mark on the AUD/USD chart.

And what this day will bring us later?

After all these eloquent speeches it’s Draghi's turn to come into play. The ECB President is speaking later today at the European Systemic Risk Board annual conference. Keep glued to the monitors, since there is often a risk of high volatility during his speeches. And then, Mark Carney (BOE Governor) will act Mario Draghi off the screen. Traders will scrutinize his public speech looking for some clues regarding future monetary policy.

Another important news will come from the USA. We expect US unemployment claims later this day.  The reading suggests the employment market is strengthening. The forecast for the number of claims is 261,000. The data is an important signal of overall economic health because it partially reflects consumer spending. 

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