US Dollar May Reverse Drop as Markets Rethink Fed Rate Hike Chances

2015-11-19 06:49:00

Talking Points:

US Dollar Drops as Fed Meeting Minutes Cast Doubt on December Rate Hike
On-Coming Fed-Speak May Encourage Rethink of Imminent “Liftoff” Chances
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The US Dollar underperformed in overnight trade amid continued fallout following the release of minutes from October’s Fed policy meeting. The Australian and New Zealand Dollars outperformed as risk appetite firmed, driving the sentiment-linked currencies upward. The MSCI Asia Pacific regional benchmark stock index rose over 1 percent.

Traders latched on to comments from a dovish minority on the rate-setting FOMC committee that remained dubious about the likelihood of a December rate hike. That seemed to inspire hopes that liftoff may yet be delayed. This was presumably seen as supportive as markets continue to fear stimulus withdrawal at a time when overall global growth is slowing.

S&P 500 futures are pointing firmly higher in late Asian trade, hinting the risk-on mood is poised to carry forward. The move may swiftly fizzle however as cooler heads prevail over knee-jerk optimism. The Minutes document showed that almost all Fed officials agreed on a need to assess labor market strength. That seemed to set the stage for what was needed to cement rate hike chances. The subsequent 271k surge in nonfarm payrolls may have delivered precisely what Janet Yellen and company were looking for.

Scheduled commentary from Atlanta Fed President Dennis Lockhart and Fed Vice Chair Stanley Fischer – both of whom seemingly lean toward December liftoff based on recent commentary – may drive this point home in the hours ahead. That could trigger a swift reversal in the greenback’s fortunes, reversing overnight losses.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:00	NZD	ANZ Job Advertisements (MoM) (OCT)	1.2%	-	2.3%
21:45	NZD	PPI Input (QoQ) (3Q)	1.6%	-	-0.3%
21:45	NZD	PPI Output (QoQ) (3Q)	1.3%	-	-0.2%
23:50	JPY	Trade Balance (¥) (OCT)	111.5B	-246.3B	-115.8B
23:50	JPY	Trade Balance Adjusted (¥) (OCT)	-202.3B	-343.1B	-309.8B
23:50	JPY	Exports (YoY) (OCT)	-2.1%	-2.0%	0.5%
23:50	JPY	Imports (YoY) (OCT)	-13.4%	-8.6%	-11.0%
00:30	AUD	RBA FX Transactions Government (OCT)	-579M	-	-785M
00:30	AUD	RBA FX Transactions Market (OCT)	516M	-	712M
00:30	AUD	RBA FX Transactions Other (OCT)	83M	-	89M
01:45	CNY	MNI Business Indicator (NOV)	49.9	-	55.6
03:17	JPY	BOJ Annual Rise in Monetary Base	¥80T	¥80T	¥80T
04:30	JPY	All Industry Activity Index (MoM) (SEP)	-0.2%	0.2%	-0.1%
05:30	JPY	Nationwide Dept Sales (YoY) (OCT)	4.2%	-	1.8%
05:30	JPY	Tokyo Dept Store Sales (YoY) (OCT)	7.4%	-	4.9%
06:00	JPY	Machine Tool Orders (YoY) (OCT F)	-22.9%	-	-23.1%
06:30	JPY	BOJ’s Kuroda Gives Press Conference	-	-	-

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:00	CHF	Trade Balance (OCT)	-	3.05B	Medium
07:00	CHF	Exports Real (MoM) (OCT)	-	0.2%	Low
07:00	CHF	Imports Real (MoM) (OCT)	-	2.6%	Low
08:00	EUR	ECB's Coeure Speaks in Frankfurt	-	-	Medium
08:30	EUR	ECB's Praet Speaks at Europe Finance Week	-	-	Medium
09:00	EUR	ECB Current Account SA (SEP)	-	17.7B	Low
09:00	EUR	ECB Current Account NSA (SEP)	-	13.7B	Low
09:30	GBP	Retail Sales Ex Auto Fuel (MoM) (OCT)	-0.6%	1.7%	Medium
09:30	GBP	Retail Sales Ex Auto Fuel (YoY) (OCT)	3.9%	5.9%	Medium
09:30	GBP	Retail Sales Inc Auto Fuel (MoM) (OCT)	-0.5%	1.9%	Low
09:30	GBP	Retail Sales Inc Auto Fuel (YoY) (OCT)	4.5%	6.5%	Low
11:00	GBP	CBI Trends Total Orders (NOV)	-10	-18	Low
11:00	GBP	CBI Trends Selling Prices (NOV)	-6	-7	Low
12:30	EUR	ECB Account of Monetary Policy Meeting	-	-	Medium