Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
US Dollar, Market Sentiment at the Mercy of the Federal Reserve

US Dollar, Market Sentiment at the Mercy of the Federal Reserve

Talking Points:

  • US Dollar and Market-Wide Sentiment at the Mercy of the Federal Reserve
  • Australian Dollar Sinks as Soft CPI Data Fuels RBA Rate Cut Speculation
  • See Economic Releases Directly on Your Charts with the DailyFX News App

A quiet economic calendar in European trading hours puts the monetary policy announcement from the Federal Reserve firmly in focus. A rate hike looks overwhelmingly unlikely. Fed funds futures suggest traders expect “liftoff” no sooner than March 2016. That means tightening now would almost certainly send markets into a tailspin. Avoiding just such an outcome is almost certainly why the Fed opted against a hike in September. Officials are surely no keener to spook investors at this point.

With that said, most Fed policymakers have continued to express a preference for raising rates in 2015. If that is truly on the agenda, the statement issued by the rate-setting FOMCcommittee following the meeting will have to set the rhetorical foundation for a December move.

Hawkish commentary will clash with market expectations and force a readjustment, boosting the US Dollar. It is also likely to weigh on risk appetite, punishing the so-called “commodity currencies”.A dovish lean is likely to yield the opposite result, though follow-on momentum may be capped considering this would amount to convergence with an already priced-in outlook.

The Australian Dollar underperformed in otherwise quiet overnight trade after third-quarter CPI data fell short of economists’ expectations. The benchmark year-on-year inflation rate registered at 1.5 percent, unchanged from the second quarter but lower than consensus forecasts calling for a print at 1.7 percent.

Traders interpreted the outcome as bolstering the likelihood of RBA easing head, with the currency sinking alongside a drop in front-end Australian bond yields. OIS rates suggest the markets now see a 91 percent probability of a 25bps reduction in the cash rate at November’s policy meeting.

Losing Money Trading Forex? This Might Be Why.

Asia Session

GMTCCYEVENTACTEXPPREV
23:50JPYRetail Trade (YoY) (SEP)-0.2%0.4%0.8%
23:50JPYRetail Sales (MoM) (SEP)0.7%1.1%0.0%
23:50JPYDept. Store, Supermarket Sales (SEP)1.7%1.1%1.8%
00:30AUDCPI (QoQ) (3Q)0.5%0.7%0.7%
00:30AUDCPI (YoY) (3Q)1.5%1.7%1.5%
00:30AUDCPI Trimmed Mean (QoQ) (3Q)0.3%0.5%0.6%
00:30AUDCPI Trimmed Mean (YoY) (3Q)2.1%2.4%2.2%
00:30AUDCPI Weighted Median (QoQ) (3Q)0.3%0.5%0.5%
00:30AUDCPI Weighted Median (YoY) (3Q)2.2%2.5%2.4%
01:45CNHWestpac-MNI Consumer Sentiment (OCT)109.7-118.2
05:00JPYSmall Business Confidence (OCT)49.249.0

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00EURGerman Import Price Index (MoM) (SEP)-0.2%-1.5%Low
07:00EURGerman Import Price Index (YoY) (SEP)-3.5%-3.1%Low
07:00EURGerman GfK Consumer Confidence (NOV)9.49.6Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.09551.10041.10281.10531.10771.11021.1151
GBPUSD1.51621.52381.52691.53141.53451.53901.5466

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES