FOMC meeting minutes to decide dollar fate

6 January,, Lagos – The intriguing start to the year continues as crude oil falls further, gold rallies slightly, China worries persist to threaten the global economy, dragging down the Yuan, Australian dollar and New Zealand dollar.

More emphasis is being placed on broader economic fundamentals like political tensions in the middle east and China’s dwindling economic outlook. However, upcoming releases on the calendar today are bound to switch attention back to key reports like the US trade balance figures as well as the Federal Reserve meeting minutes.

UK Services PMI (9:30 P.M GMT)

Already this week, we have had both the manufacturing and construction PMI data. A disappointing manufacturing PMI was released on Monday at 51.9, down from 52.5 in November. It showed a further slowdown in the output and new order growth. According to the official report, over the final quarter as a whole, the average readings for the headline PMI, output index, new orders index, new export orders index and employment index were all above their respective averages. However, averages over 2015 were in each case below those achieved in 2014.  The construction PMI was positive, surpassing forecast to come at 57.8, as output growth accelerates from November’s seven-month low. The services PMI is forecast to come at 55.6, a potential slight drop from 55.9 recorded last month. The pound remains weak, hence a disappointing data will add more pressure on the currency.
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FOMC Meeting Minutes

Following the increase in interest rate in the December meeting, traders and investors will now be watching for more information as to the mindset of the Fed from the FOMC meeting minutes. It is clear that all Fed members voted for a rate hike, however, it remains unclear how much they differed on the urgency. There is also the question of how many times the Fed will be willing to raise rates this year for inflation to hit the target range. The ADP Non-Farm Employment Change will also be released today, forecast t show 193k jobs added in the past month. While the trade balance is forecast to show a deficit of 44B. The dollar is therefore expected to be one of the biggest movers for the day. The greenback has resumed the year strong, however, the reports today may be enough to overturn the current trend.

Canada Trade balance (1:30 P.M GMT)

Canada’s trade balance is forecast to show a difference in value between imported and exported goods during the reported month of – 2.6B. This figure is almost inline with the previous month as Canada’s merchandise trade deficit widened in October as exports fell for a third straight month. The Canadian dollar remains weak, and is being dragged further down by the renewed fall in oil prices.

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