Upcoming Fed Minutes Expected To Support Recent Euro Decline

On currency markets, the moves were within fairly tight ranges yesterday. Of the action that did occur, the euro remained near recent lows, not helped by expectations of further monetary stimulus from the ECB.

In level terms, EUR/USD continued to trade below the $1.07 level, in a tight range near $1.065. EUR/GBP has been struggling to hold the 70p mark for much of the last 24 hours. This is a key support level for the pair that has remained intact this year despite being tested already on a few occasions. Elsewhere, GBP/USD spent a good chunk of yesterday attempting to regain $1.52 and opens this morning just below this level.

For the day ahead, the main focus for markets will be the FOMC minutes from their October meeting (7 PM GMT+1) which surprised markets with its hawkish tone. Markets will be looking for further insight into what the FOMC wants to see from the US economy to be comfortable with hiking rates at their December meeting.

Fed-wise, there is also a host of FOMC members on the speaking circuit today including NY Fed President Dudley. From a dollar viewpoint, these various Fed updates could help provide a supportive backdrop to the currency. As a result the dollar may retain the upper hand on forex markets today.

Germany first to access Chinese market

Germany today have flicked the switch on securities trading solely in the renminbi. Germany has been successful in accessing over 200 securities such as government and corporate bonds, including exchange traded funds.

This all occurs as the Renminbi is on the verge of being granted reserve currency status by the IMF.  Deutsche Boerse is the first company to achieve this link because the Shanghai Stock Exchange and China Financial futures Exchange has a share in the initiative. Read more on Bloomberg

Four things to watch from Fed October minute

The Federal Reserve’s October minutes will be released today. As one more policy meeting member recently gave strong inclination that a December lift off was very possible. The major American banks are also betting that December will see interest rates rise.

One key piece of information is whether any clarity will be available depending how the Federal Reserve will communicate the gradual process of raising interest rates. This is especially important as the FOMC members have touted a gradual process.

UK’s inflation dilemma

The UK this week posted inflation figures which were disappointing. The consumer price index for October was 0.1%. This is well below reaching the 2% target of the central bank, as Mark Carney stated that it could be 2017 before inflation reaches 2%.

Aussie resists decline despite commodities rout

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