As expected, the BOE MPC held rates unchanged today after analysts were placing about a 50/50 chance for a “surprise” rate hike.
The USD is mixed-to-firm after a slow start in Asia, lack of fundamental news until late European trade kept the USD fairly range bound again.
Major news overnight was the RBA leaving interest rates on hold. The failure to raise rates was initially seen as a bit bearish for the Majors but traders are watching more news coming later n the week so the reaction was more of a knee-jerk.
Wrapping up today’s USD action, the Greenback continued inside two-way ranges established earlier in the week for the most part.
The USD is slightly better this morning after a bout of profit-taking in Asia; traders note that the tighter ranges and end-of-month plus end-of-quarter pressures have put the majors on the defense.
In my view, the USD/JPY is poised for a bout of short covering but I don’t think the long-term position of the USD is for strength.
Today US Fed chairman Bernanke is speaking before the Joint Economic Committee and no doubt traders will be looking for clues to the Fed’s next move.
Traders complained of light volumes today as the USD continued to show residual strength despite better economic data overseas and less than friendly data here in the US.
Starting in Asia the USD remained in tight ranges as traders waited for the release of European data; German IFO sentiment survey forecast at 106.6 was released at a better-than-expected 107.7 giving the EURO a bit of a boost.
Traders note that the move higher in the USD was well-coordinated across the major pairs but volumes were not high at all suggesting that the strength might be short lived; which it was.