USD: Fed monetary policy dictates market sentiments

Trading sentiment on the markets continues to be dominated by speculation about future Fed monetary policy. The dovish interpretation of Wednesday’s FOMC minutes by international investors sparked a considerable shake-out of US dollar positions and yesterday’s US news flow did little to turn that around. Stock markets continued to rally, driven by this increased conviction of an accommodative Fed policy. On the FX markets, trading remains choppy with EUR/USD ranging from $1.32 to $1.2960. GBP/USD has managed to consolidate above the $1.51.


EUR: Industrial production in Euro zone falls

According to Eurostat, industrial production across the Euro zone fell by 0.3% in May as Germany recorded its first monthly fall in output this year. The decline in activity was driven by durable goods and capital goods leaving total production down 1.3% on an annual basis. Activity in France fell back after a strong April while production in Italy and Spain moved back into positive territory. On the FX markets, EUR/USD hit a high of $1.3101 before easing back towards the $1.3050 level while GBP/EUR has consolidated above 1.1550



RMB: Weak data from China

Further concerns for the Chinese economy came yesterday as weak trade data reported the first fall in exports since January
2012. Chinese exports declined by 3.1% in June from a year earlier, well below the market consensus forecast of a 4% increase. This latest release will raise fresh concerns of the impact of a global slowdown on the demand for Chinese goods. Market
analysts will now be looking ahead to China’s Q2 GDP figures out early next week.