U.S. Dollar Mixed but Steady at Mid-Session

The U.S. Dollar is trading mixed against the majorcurrencies but holding steady at the mid-session. The slow volatility stemsfrom the lack of fresh U.S.economic news and nothing new regarding Greece and its budget woes.

The U.S. Dollar is trading mixed against the majorcurrencies but holding steady at the mid-session. The slow volatility stemsfrom the lack of fresh U.S.economic news and nothing new regarding Greece and its budget woes. Forextraders are also keeping things tight ahead of today’s Bank of Japan meetingand the Reserve Bank of New Zealand and Federal Reserve meetings onApril 28th.

The Bank of Japan is expected to keep interest ratesunchanged at historically low levels. The market moving news will be how theBoJ assesses the economy and inflation. Demand for higher risk assets, namelythe U.S.stock market, has been pressuring the Yen lately. Deflation has alsocontributed to the weakness. Traders will be looking for a rosier outlook forthe economy and hints of inflation from the BoJ policy makers.

One sticking point between the government and the BoJ hasbeen the topic of quantitative easing or stimulus. The government continues topressure the central bank for expanded stimulus. While the BoJ may pass onexpansion by limiting its purchase of Japanese Government Bonds, it mayconsider lengthening the maturities to appease the government officials. At this time it doesn’t look like the Bank ofJapan will do anything to encourage traders to buy the Yen so the USD JPYuptrend is likely to continue as long as U.S. equity markets keep rising.

The GBP USD is trading higher at the mid-session. Recent U.K. economicdata has been helping to the support the Pound, but gains have been limited bypolitical uncertainty. This outlook changed overnight following the release ofa new poll showing that the main opposition Conservative Party is gainingground. This outcome will reduce the chances of a hung parliament and increasesthe chances that a solution may be hammered out regarding the U.K. budget deficit.

The NZD USD is the big gainer today. Although the ReserveBank of New Zealand is expected to keep interest rates unchanged at 2.50%,traders feel that the RBNZ may be moving more quickly toward increasinginterest rates 25 basis points sooner than previously estimated. Recent betterthan expected economic reports are most likely moving the central bank closerto hiking rates before the previously mentioned second half of the economy.

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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