The USD has gained some ground this week and last night FOMC meeting has solidified the gains as markets now price in an over 90% probability of a June rate hike. The USD will remain sensitive to new out of the USA with traders quick to react to events as they try and accurately price in new information. Today’s Unemployment Claims figure out of the USA, expected at 246k, allows for such an opportunity as we look to see how many individuals filed for unemployment insurance for the first time during the past week. The figure is regarded as an important signal of the overall health of the economy because the more working people there are the more likely consumer spending will rise and the healthier the economy will be. A higher than expected release will see the USD weakened as markets price in the worsening conditions and vice versa should the figure come in lower than expected.
The EUR will have its own news to look forward to as we see the president of the ECB, Mario Draghi, take the podium at the Jean Monnet Foundation. The ECB controls the direction of short term interest rates and the monetary policy of the zone, therefore Draghi’s speeches may result in volatility as markets price in his views on the future outlook of the EU economy and the actions which may follow. A more positively toned speech, will see the EUR strengthen while a more subdued tone will see the EUR lose ground.
Finally, the Reserve Bank of Australia, is set to release its monetary policy statement in the Asian session. The statement will provide an insight into the banks view of economic conditions and inflation, both key factors in determining the value of a currency. A more positively toned statement will see the AUD strengthen as traders snap up the currency in anticipation of a recovering economy while a more negatively toned speech will see the AUD sold off as trader’s flock to alternative assets.