August 1: Asian session
In the US the Federal Open Market Committee yesterday made a slightly more dovish statement keeping the size of monthly bond purchases unchanged, while warning that persistently low inflation could hamper the recovery. The Fed warned that inflation risks staying ‘persistently’ below 2% but said it will rise back to target in medium term.
Traders have gone over the FOMC statement and are now ready to face news from Europe. EUR/USD declined to $1.3270 after it reached $1.3344 yesterday. GBP/USD is down by more than 40 pips around $1.5160, but above yesterday’s low at $1.5123. EUR/GBP rose to more than 4-month high at 0.8768. We are waiting for policy decisions by the Bank of England and the ECB later today. The central banks are expected to keep policy unchanged.
USD/JPY rose to the 100-day MA at 98.50. Yen fell as a report showed Japanese investors sent funds into foreign bonds for a fourth week and as Asian shares climbed on better-than-expected Chinese manufacturing data.
AUD/USD hit an almost 3-year low at 0.9825 on bets the Reserve Bank will cut interest rates next week. NZD/USD is trading on the downside in the $0.7970 area after spiking down to $0.7923 earlier today. USD/CAD rose from the 100-day MA at 1.0267, but remain below 1.0300.