Greenback Continues to Gain Ahead of FOMC

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Geneva, Switzerland -- (SBWIRE) -- 01/30/2014 -- The greenback continues to trade higher against all major currencies on Tuesday after an upbeat consumer confidence report renews hope that the Fed policy meeting today will conclude by further reducing its USD75 billion monthly bond-buying program. During early Asian session, the USD was up against GBP, JPY, CHF, AUD and CAD; mixed against EUR and NZD.

US consumer confidence released by the Conference Board showed the index improved to 80.7 this month from 77.5 in December. Analysts were expecting the index to rise to 78.1. The numbers fueled expectations that the Fed will announce fresh cuts to its USD75 billion bond-buying program, likely to be another USD10 billion reduction. Meanwhile a separate report showed that US durable goods orders fell unexpectedly in December, which stunts the greenback’s advancement. Also, the Commerce Department reported earlier that durable goods orders fell 4.3% in December, baffled analysts’ expectations for a 1.8% gain. Core durable also goods fell 1.6% in December, the largest drop since March, compared to consensus of 0.5% increase. Despite the drop, investors’ sentiment on greenback is still bullish from the stark improvements of US economic indicators in recent months, fuelling hopes that the Fed will continue to taper its current USD75 billion monthly bond-buying program.

Meanwhile, UK’s Q4 GDP data showed that the economy grew 0.7% and expanded 2.8% YoY, both numbers were in line with expectations. However, the data is still too early to prompt the BoE to start raising interest rates. Nonetheless, the figures have kept the Pound strong against most of the other major currencies.

On Wednesday, the US Fed is to announce its monetary policy and interest rate decision. New Zealand’s RBA will also release its interest rate decision. Both data will be closely watched. Many markets in the Asia Pacific region will be closed for the Lunar New Year long weekend holiday. Markets in China will be closed from Friday to next Thursday while markets in Hong Kong, Singapore and Malaysia are closed from Friday until next Monday.

Economic data for the rest of this week are as follows:

Wednesday: US Fed to announce its asset-buying rate and interest rate decision; New Zealand interest rate decision
Thursday: Japan retail sales and CPI; Eurozone unemployment rate, Australia import and export prices; China PMI; Switzerland KOF economic barometer; US GDP, initial jobless claims and pending home sales; New Zealand trade balance.
Friday: Japan household spending, inflation, and industrial production; Australia PPI; Eurozone CPI and unemployment rate; Canada GDP; US consumer sentiment and personal spending

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