Bank Of Japan, Federal Reserve, Reserve Bank of New Zealand Keep Forex Traders On Edge

The big day has finally arrived with the US Federal Reserve decision and statement due in just a few short hours. The US dollar is flat this morning holding steady at 85.47 after declining on Monday after a lackluster durable goods report. The US Dollar traded on a negative note on Tuesday and declined around 0.1 percent yesterday on the back of upbeat market sentiments which led to decline in demand for the low yielding currency. Also, investors remaining cautious ahead of the US Federal Reserve decision acted as a negative factor.  However, favorable economic data from the country cushioned sharp downside movement in the DX. The currency touched an intra-day low of 85.29 and closed at 85.47 on Tuesday. US Core Durable Goods Orders declined by 0.2 percent in September as against a rise of 0.4 percent in August. Durable Goods Orders fell by 1.3 percent in September from an earlier drop of 18.4 percent a month ago. The Case-Shiller Composite-20 House Price Index (HPI) grew to 5.6 percent in August when compared to 6.7 percent in earlier month. Richmond Manufacturing Index gained by 6 points to 20-mark in October with respect to 14-level in September. The Conference Board  Consumer Confidence rose by 5.5 points to 94.5 in current month as compared to 89-mark in September.

Money Managers and analysts widely expect that the Federal Open Market Committee, in a post-meeting statement on Wednesday, will end its six-year quantitative easing program, which last December stood at $US85 million a month in asset purchases and has been progressively trimmed. The policymakers have also suggested the first hike in the federal funds rate, pegged at a range of zero to 0.25 per cent since late 2008, could come in mid-2015, and most analysts said they did not expect the FOMC statement will alter that outlook.

The Japanese yen was flat this morning trading at 108.15 after Japanese industrial production skyrocketed as reports revealed today. Industrial production rose 2.7 percent on month, above expectations for a 2.2 percent rise and up from a 1.9 percent decline in August, marking the fastest expansion since January. Following the release the Japanese government said that industrial production is “seesawing.” The government raised the consumption tax to 8 percent from 5 percent to rein in the country’s budget-to-GDP ratio. It was the first tax hike in 17 years. Analysts have said the performance of Japan’s economy over the third quarter will likely determine whether the government proceeds with a second tax hike to 10 percent in 2015.

The Aussie gained 8 points to trade at 0.8864 while the kiwi added 7 points as market sentiment improved helping the Tasmanian currencies to trade in the green. A surge in the number of tourists from China, India and Singapore is expected to help drive strong growth in inbound tourism to Australia in the current financial year, says a new report from Tourism Research Australia. The State of the Industry report released on Wednesday forecast growth of 10.5 per cent for China, 6.6 per cent for India and 5.8 per cent for Singapore. Traders in New Zealand are focusing in on the upcoming Reserve Bank policy meeting although no changes are expected; Governor Wheeler might have something to say after the meeting.