Dollar Holds Ground Ahead of the Fed

We saw some good moves in the market yesterday as a quiet data day let the market enjoy some smoother trading conditions. The dollar managed to gain some good ground through the first couple of sessions before giving a bit back into the late New York session. As we said yesterday, barring any major Geo-Political issues, this week will be mainly about the Fed and traders are now wary that we will see a much more hawkish FOMC in line with recent changes of rhetoric from both the BOE and ECB. This is helping to keep the dollar relatively well bid across the majority of products ahead of Wednesdays announcements.

We saw the stock markets continue to grind higher yesterday and this kept the UsdJpy strong, hitting new highs, although the momentum does appear to be falling back. The Euro continues to trade in relatively tight ranges and cable dropped off from recent highs back into mid range. The commodity currencies all had good moves with the Usd gaining well against them, the Cad move helped by a drop in Oil and Aussie with a decent move to the downside in Gold.

Looking ahead to today and in the Asian session the main focus will be on the Monetary Policy Meeting Minutes from the RBA, into the London session and the German ZEW Economic Sentiment will be closely watched by Euro traders. In the New York session, we have the US Building Permits data alongside the Current Account and Housing Starts numbers which will be followed by the GDT Price Index later in the night.

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