Traders look for signs of tapering amidst slew of positive US data

It has been a quiet week with no significant data releases but positioning yesterday was sell the USD. So for tonight we are not expecting to see any tapering announcement, but the market will be looking for any hints as to whether the Fed will start tapering the $85 billion bond purchases. In terms of economic data it has been another strong month for the US with strong data from unemployment claims reducing, the unemployment rate dropping 0.1%, strong PMI data and growing retails sales and also a reduced Trade Balance. Putting all this in the report, it will be hard for them to be too dovish about the economy but you can be assured that they won’t give too much away. I would expect a bit of a mixed view on tonight’s meeting in the FX markets and more traders getting ready for next month.

Moodys has revised its US outlook to stable after more than five years. This has given USD a boost overnight and reports from the Red Book indicate that US retail sales are  up 0.2% in the first two weeks of August.

JPY meanwhile had a sharp fall on reports that Kuroda is calling on Japan to proceed with the sales tax hike and he believes that this will not affect his goal to beat Japan’s 15-year deflation.

The euro has fallen from its six-month high yesterday, with the USD gaining on FOMC tonight and Moodys’ upgrade to stable. But also weighing on the euro is talk of Greece still needing a third aid programme as Germany’s Schaeuble says, and reports that this will be financed via the EU budget.

EUR/USD

Supports 1.3400 1.3350 1.3300 | Resistance 1.3450 1.3485 1.3500

USD/JPY

Supports 97.10 96.85 96.45 | Resistance 97.75 98.25 98.60

GBP/USD

Supports 1.5650 1.5625 1.5560 | Resistance 1.5700 1.5725 1.5750