GDP Numbers and the FED Put the Dollar in the Spotlight

Daily Update - 30th January 2019

Yesterday’s Market

• GBP UK Parliamentary Vote on Brexit Plan B

Yesterday’s Explained

The GBP/USD pair once again flirted with the 1.3200 level but failed to advance beyond the key figure, falling all the way down to 1.3124 mid-US session, as EU authorities anticipated that there are no chances of renegotiating the Brexit deal, despite the UK Parliament was determined to vote a series of amendments, something that they actually did, although most of them, were rejected by lawmakers.

Ahead of the votes, the pair managed to bounce up to the 1.3160 price zone, but the disappointment resulting from the lack of progress in defining a Brexit deal sent it down.

Something the EU is not willing to do, was approved. The only other amendment approved was an only advisory one that has no legislative force that said that the UK will not leave the EU without a deal.  PM May will try now to renegotiate with the EU.

Intensifying the quietness around the EUR/USD is the wait-and-see stance ahead of the US Federal Reserve monetary policy meeting this Wednesday. 

When Chinese Vice Premier Liu He, the head of the team handling trade negotiations with the United States, landed in Washington on Monday for a critical round of talks this week, that Chinese telecom giant Huawei Technologies had stolen intellectual property from the United States — one of the main, long-standing U.S. grievances about China’s trade and industrial practices.

Today’s Market

• EUR Harmonized Index

• USD ADP Employment Change

• USD Fed Interest Rate Decision

• Fed Monetary Policy Statement

• FOMC Press Conference

Today’s Focus

HICP is an index of consumer prices calculated and published by Destatis, on the basis of a statistical methodology that has been harmonized across all EU member states. HICP is a measure of prices used by Governing Council of EU to define and assess price stability in the euro area as a whole in quantitative terms. 

The Employment Change released by the Automatic Data Processing, Inc, Inc is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth.

With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. In the US, the Board of Governors of the Federal Reserve meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation.

Starting this meeting, a brief press conference will be offered by Chief Powell, which means that, despite not being one of those meetings that provide updated forecasts, it could anyway trigger some wild action around the USD. 

The focus will be around the balance sheet after a report late last week pointed to a probable pause in the pace of reducing it. Overall, the market is expecting a dovish stance from Powell & Co.