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By xemarketanalysis February 20, 2019 11:03 am
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    XE Market Analysis: Currency Market is Subdued, Investors Seek Guidance from the FOMC Minutes

    OVERVIEW

    • The US dollar bounces back after yesterday’s freefall and waits for the FOMC's meeting minutes

    • Investors are also hoping for a real breakthrough in Brexit talks as the UK PM meets with EC President

    • NYMEX WTI Crude consolidates around a 12-week high, near $55.50.

    HIGHLIGHT

    USD/CAD is on a syrupy maple slide for the fourth consecutive session as the Canadian loonie is the only major currency trading stronger. The pair is trading close to its critical 200-day moving average, and we should expect US dollar buyers to line up here at these levels. The market will be closely watching the details of the FOMC minutes due later today and sift through Poloz’s speech on monetary policy (on deck tomorrow in a full day of announcements from central banks).

    US DOLLAR

    The US dollar is bouncing back from yesterday’s lows and is in trading in positive territory vis-à-vis the major currencies this morning. Market participants are taking a cautious approach, ahead of the release of the FOMC’s Meeting minutes (due out at 2 PM ET). 

     
    The document is likely to provide more clues on last January decision and the reason for the apparent dovish tilt from the Fed. The British Pound is trading slightly lower today after appreciating nearly 1.30% against the greenback in yesterday’s session. UK PM is meeting with the EC President, and the market is pinning its hope (again) for a real breakthrough in the Brexit deadlock. Global equity markets are also recording gains after preliminary reports indicate trade talks between the US and China are going “very well”. 
     
    The calendar is very light today with the main focus on the minutes from the Federal Reserve Bank.

    BRITISH POUND

    Sterling recorded a strong bounce yesterday, gaining 130 basis points following a robust labour market report. The market is now hoping the meeting between British PM May and EU President Juncker in Brussels today will pave the way for an orderly Brexit. The clock is ticking towards March 29th – Brexit Day and local political chaos, along with no exit plan have injected continued volatility in the pound.

    EURO

    EUR/USD is trading in a narrow range in the absence of any market-moving fundamental data releases. The pair has bounced back from recent lows, but poor economic numbers from the Euro bloc are likely to keep a lid on any further increase.

    CANADIAN DOLLAR

    USD/CAD is extending its steady decline for the fourth session in a row. The pair slips below the 1.32 level, despite a pullback in oil futures price. The price for a barrel of sweet light crude oil is hovering around $55.50, a 13-week high. We expect the pair to see dip buyers around key 1.3150 levels. The market will also be closely watching for BOC Governor Poloz speech on the monetary policy at the Chamber of Commerce of Metropolitan Montreal tomorrow. 

    AUSTRALIAN DOLLAR

    AUD/USD consolidates after touching a 9-day high after reports surfaced that trade talks between China and the US are progressing well. The parties agreed to have a stable yuan. We expect AUD and NZD to gain further on more optimism around ongoing negotiations.

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