Kiwi Boosted by Better-Than-Expected CPI Data, Yen Traders Await BOJ Policy Decision

The U.S. Dollar is trading flat against a basket of major currencies early Wednesday, following yesterday’s dramatic technical closing price reversal top. The chart pattern suggests that investors were hit with unexpected news and decided that taking profits after posting a two-week rally was the best option at this time.

At 0420 GMT, March U.S. Dollar Index futures were trading 95.990, up 0.031 or +0.03%.

Traders are saying the U.S. Dollar lost ground in reaction to weaker U.S. Treasury yields. Traders bought safe-haven Treasuries as concerns about slowing global growth and U.S.-China trade tensions encouraged investors to shed risky assets.

Traders have been shying away from risky investments since early Monday when China reported the slowest growth since 1990. Later on Monday, those concerns rose after the International Monetary Fund (IMF) cut its 2019 and 2020 global growth forecasts. Additionally, on Tuesday, investors continued to move money into the safe-haven Treasurys after a report by the Financial Times said that the United States had rejected China’s offer for preparatory trade talks, preliminary scheduled for January 30-31.

New Zealand Dollar

The New Zealand Dollar is trading higher against the U.S. Dollar early Wednesday in reaction to data which showed that consumer inflation edged higher in the fourth quarter, dimming the possibility of an interest rate cut.

At 0434 GMT, the NZD/USD is trading .6780, up 0.0032 or +0.48%.

Australian Dollar

The news about a global economic slowdown and the possible cancellation of trade talks between the U.S. and China weighed on the Australian Dollar early in the session, but the better-than-expected CPI data from New Zealand helped turn the Aussie positive.

At 0437 GMT, the AUD/USD is trading .7141, up 0.0021 or +0.29%.

Japanese Yen

The Dollar/Yen is recovering from yesterday’s weakness, primarily due to the slight recovery in U.S. equity markets. Short-covering ahead of the Bank of Japan’s interest rate decision is also taking place. The BOJ is widely expected to hold interest rates at ultra-low levels. The BOJ is also expected to release its monetary policy statement and its outlook report. The focus for the central bank will likely be on concerns over slow growth.

At 0447, the USD/JPY is trading, 109.656, up 0.289 or +0.25%.

Earlier in the session, Japan reported that its exports in December fell the most in more than two years. Exports in December fell 3.8 percent from a year earlier, Ministry of Finance (MOF) data showed on Wednesday, bigger than a 1.9 percent drop expected by economists. It was the sharpest year-on-year decline since October 2016. Traders blamed the on-going trade war between the U.S. and China for the weakness.

This article was originally posted on FX Empire

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