The forex markets are generally staying in range as another week starts. FOMC minutes will be the main focus of the week. Recent comments from Fed officials were generally hawkish, maintaining the general view of three rate hikes this year. And there are some comments that raised the probability of a March hike mildly. The markets will look into the minutes of January 31 – February 1 meeting to confirm that it’s a consensus among FOMC minutes. Meanwhile, it’s generally expressed that fiscal policies were not taken into account in Fed’s last projections, due to lack of details available. US president Donald Trump has promised to deliver "phenomenal" tax reforms within two or three weeks. And it’s about time for Trump to deliver. And the announcement of Trump’s tax overhaul could overwhelm the markets.

Yen Lower as Trade Surplus Shrank

Yen trades mildly lower today as trade deficit narrowed to JPY 0.16T in January, below expectation of 0.28T. Exports rose 1.3% yoy, much weaker than expectation of 4.7% yoy. That’s, nonetheless, the second month of import growth, following 14 straight months of contraction. Some economists noted that’s in line with strengthening global demand. However, the outlook ahead is unclear thanks US’s trade policies. In particular, Donald Trump’s protectionist policies could be a blow to Japanese exporters, in particular auto manufacturers.

Also released today so far, New Zealand PPI inputs rose 1.0% qoq in Q4 while PPI outputs rose 1.5% qoq. UK Rightmove house price rose 2.0% mom in February. Germany will release PPI today. UK CBI trends total orders, Eurozone consumer confidence and Canada wholesale sales will be featured. US in on bank holiday today.

FOMC Minutes, RBA Minutes and Eurozone PMIs and German Ifo to highlight the week

For the week ahead, FOMC and RBA minutes are the main feature. Meanwhile, Eurozone PMIs and German Ifo will be closely watched too. Euro is so far the second weakest major currency this month, next to Kiwi. The common currency is weighed down by political uncertainties in Europe. The closer ones include French election and Brexit negotiations. The PMIs and Ifo could be a gauge to see how sentiments in business are being affected by those uncertainties. Here are some highlights for the week:

• Monday: New Zealand PPI, Japan trade balance; German PPI; Eurozone consumer confidence; Canada wholesale sales
• Tuesday: RBA minutes; Japan PMI manufacturing, all industry index’ Swiss trade balance; Eurozone PMIs; US PMIs
• Wednesday: Australia wage cost; German Ifo, Eurozone CPI final; UK GDP revision: Canada retail sales; US existing home sales, FOMC minutes
• Thursday: Australia private capital expenditure; German GDP final, Gfk consumer sentiment; US jobless claims
• Friday: UK BBA mortgage approvals; Canada CPI; US new home sales

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7643; (P) 0.7677; (R1) 0.7699; More…

Intraday bias in AUD/USD remains neutral for the moment. With 0.7605 minor support intact, further rise cannot be ruled out yet. However, considering bearish divergence condition in 4 hour MACD, we’d expect strong resistance from 0.7777/7833 resistance zone to limit upside and bring near term reversal. On the downside, break of 0.7605 support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for 55 day EMA (now at 0.7534) first.

In the bigger picture, we’re still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8186) and above.

Economic Indicators Update

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