EUR/USD was falling today for the most part of the trading session as Greece asked its European creditors to extend the term of loan without the austerity measures attached to the bailout plan. Yet the currency pair rebounded after the FOMC released its policy minutes that turned out to be much more dovish than traders were counting on. Now, EUR/USD trades sideways.
PPI dropped 0.8% in January. The drop was two times bigger than predicted decline of 0.4%. The index was down 0.2% in December. (Event A on the chart.)
Housing starts were at the seasonally adjusted annual rate of 1.07 million in January, matching forecasts exactly, while the December’ reading was at 1.09 million. Building permits were at the seasonally adjusted annual rate of 1.05 million, trailing market expectations of 1.08 million and below the previous month’s revised value of 1.06 million. (Event A on the chart.)
Industrial production rose 0.2% in December, trailing analysts’ estimates of 0.5%. The November’s reading was revised from -0.1% to -0.3%. Capacity utilization remained at the negatively revised November’s rate of 79.4% while experts anticipated an increase to 79.9%. (Event B on the chart.)
FOMC released minutes of its January policy meeting. They turned out to be more dovish than the market has anticipated, particularly the statement:
Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time.
As for wording ‘patient’ in the statement language, many policy makers preferred to keep due to concerns that dropping of the phrase may cause an excessive reaction from markets. (Event C on the chart.)
Net foreign purchases rose $35.4 billion in December, missing the consensus forecast of $41.3 billion. The November’s figure was at $33.5 billion. (Event D on the chart.)
Yesterday, a report on NY Empire State Index was released showing a drop from 10.0 to 7.8 in February, below the forecast value of 8.9. (Not shown on the chart.)
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