Post FOMC FX update

October 29, 2015 by

The FOMC last night gave a strong indication of a possible rate hike as early as December on the back of a strong US economic growth prospect. Based on this hint by FOMC, USD rallied across the board as well as indices but commodity prices and emerging market currencies were all under pressure of a strong dollar. However, traders and investors will be watching closely todays GDP figure from the US economy as this will be a confirmation of a rate hike as early as December. Market is expecting a GDP figure of 1.6%, a drop from 3.9% from the previous quarter. A strong GDP print will see USD rally across the board and commodity prices will slide to the downside.

Royal Bank of New Zealand left interest rate unchanged last night but reiterated the fact that they might likely cut interest rate if incoming economic data falls below expectation. Kiwi dropped across the board based on this statement from Royal Bank of New Zealand after an initial sell off from FOMC statement because of USD strength.

Furthermore, Japan’s industrial production figures beats all analyst estimate , earlier this morning the figures released indicates that industrial production was up by more than 1% which prints at 4.1%. This is coming at a time when Japanese economy experiencing poor economy growth which has led to contraction and export as dropped massively. All eyes will be on Bank of Japan tomorrow as the Bank monetary policy committee is faced with challenges of wage growth and falling inflation. Increasing their ongoing assets purchase might be an option for the Bank of Japan in other to drive growth.