• WSJ: “Diminishing 2015 hike chances”
  • Quiet European session
  • Mixed Aussie employment data
  • UK trades steadier

“The chances of a Federal Reserve interest-rate increase in 2015 are diminishing amid new signs of anemic economic activity”, reads the first line in the main article of the Wall Street Journal’s front page. Recent economic data has shown the U.S. economy is performing slightly worse than expected, and the general consensus in markets suggests the Fed will hold off rate hikes until next year. The deteriorating conditions in consumer spending, inflation, and jobs have validated the comments from some Fed officials and economist that urged the Fed to remain patient before triggering hikes. The Fed has two meetings scheduled until the end of the year, October and December, to make up its mind. Futures-markets have recently changed their view and see a 1-in-3 probability of a rate increase by the end of this year. Expect to see the U.S. dollar weaker has we move into year-end.

Market participants are now looking at recent U.S. data on consumer prices, which showed slightly better than expected CPI figures for the month.

Elsewhere, European markets are trading slightly higher, but the lack of significant economic events leaves market movements pegged to U.S. data and economic developments. The UK also has an empty economic calendar and trades slightly muted after yesterday’s busy session.

In Australia, Unemployment figures improved a bit, moving 0.1% lower to 6.2%. But participation rates showed a slight decrease. The aussie dollar has been gaining strength in the past few day, but recent data and global economic slowdown keep the possibility of further rate cuts by the Reserve Bank of Australia (RBA) well alive.

EURUSD is lower this morning after European stocks welcomed the drop in the Fed rate hike bets that see 1-in-3 chances of lifting rates by the end of 2015. CPI figures showed slight improvements in consumer prices and the positive readings pushed the currency pair 0.5% lower.

GBPUSD barely moving in this Thursday session, after strengthening considerably in yesterday’s session on the pleasantly-surprising unemployment numbers. Moving ahead, the currency pair will be driven by U.S. events, as sterling has no economic data due today or tomorrow.

USDCAD is moving higher after seeing a steady movement in the past two weeks mainly driven by oil price fluctuation. Generally, we see CAD trading in tandem with oil prices, but today’s US CPI data pulled the currency pair out of the downward trend it saw in past days.

AUDUSD is seeing a reversal on yesterday’s 0.4% gain, after slightly better CPI figures from the US. The aussie dollar expects the released of the minutes of the RBA latest meeting next Tuesday. That will be the most important report for AUD coming up next week.