2 Major FX Event Risks Coming on Wednesday
The US dollar shrugged off mixed consumer confidence numbers earlier Tuesday, but with ADP employment data and the FOMC rate decision on Wednesday, volatility may not stay subdued for long.
The US dollar (USD) found some life in late-morning North American trading despite a relatively mixed consumer sentiment number that missed its mark on the headline basis. US consumer confidence for July came in at 80.3 versus 81.3 forecast, with the expectations component printing at 84.7 versus 91.1 the month prior.
The other underlying data was quite good, however, with the present situation component registering a reading of 73.6 versus 68.7, the highest since the pre-crisis levels of 2008. Jobs’ hard-to-get measure also improved to 35.3 versus 37.1, signaling an improvement in the labor market.
Overall, the confidence numbers indicate that consumer sentiment remains relatively positive, as the US economy continues to expand at a steady but unremarkable pace.
The greenback ignored the mixed signals in the report and gathered some momentum after EURUSD once again failed to hold the 1.3300 figure. The pair briefly breached 1.33, but quickly found sellers for the third day in a row.
With key economic data scheduled to start hitting the screens tomorrow, the currency markets remain subdued as traders prepare for the onslaught of news, including the ADP employment report and Federal Open Market Committee (FOMC) meeting and rate decision on Wednesday, both of which could prove highly volatile for the markets.
Earlier, in today’s Asian session, the Australian dollar (AUD) saw a sharp selloff after very weak housing data and ultra-dovish commentary from Reserve Bank of Australia (RBA) Governor Glenn Stevens sent AUDUSD tumbling by more than 150 points.
See also: AUD/USD Suffers Deadly Double Whammy
By Boris Schlossberg of BK Asset Management
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