Dollar Gains as Forex Traders Await Fed and G-20 News

Forex traders have been buying the Dollar since last night as they lighten up positions ahead of this week’s Fed FOMC and G-20 meetings.

Forex traders have been buying the Dollar since last night as they lighten up positions ahead of this week’s Fed FOMC and G-20 meetings. Some traders believe the Fed is already considering the implementation of an exit strategy but is most likely going to announce the end to their financial stimulus programs.

Traders are also anticipating news from the G-20 meeting regarding global stimulus. In addition, the Dollar’s position as the world’s reserve currency will also be discussed. Some members are most likely to introduce a plan to reduce the Dollar’s role.

The EUR USD is consolidating at the midsession after several weeks of strength. The Euro still holds an interest rate advantage over the Dollar so don’t expect it to get too bearish. Most of the movement is just housekeeping ahead of the Fed report on the 23rd.

Concerns over the U.K. financial system continue to weaken the GBP USD in a move that started late last week. The acceleration to the downside is being triggered by reports that Lloyds Banking Group Plc may need additional capital. This issue will compound the Bank of England’s mandate to get the economy back on track.

Last week’s comments from Japan’s Finance Minister are weighing on the Japanese Yen this morning. In a statement last week, the finance minister said exchange rates should be set by economic conditions. This comment triggered profit-taking and fresh selling as traders try to push the Yen to a level which better reflects the economic condition of the economy. Some traders fear that the government will step in to weaken the Yen unless market forces take over.

Weaker oil and equities is putting pressure on the Canadian Dollar. Weakness in the equity markets is also leading to profit-taking in the AUD USD and NZD USD. Demand for higher yielding assets is down at this time ahead of the Fed meeting on the 23rd.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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