No Rest for the Weary as Commodity FX Slide Continues
- AUD/USD begins breaking out of its five-month long triangle.
- JPY-crosses remain well-supported by risk-off flows.
- See upcoming event risk for FX markets.
Good news is bad news again. In the "what's good data is bad news" world, any indication that the Fed could tighten policy faster than currently expected - only two rate hikes are priced in for this year (per Fed funds futures) - against rapidly deteriorating risk sentiment and an increasingly negative geopolitical news cycle seems like a bad mix for higher yielding currencies and risk-correlated assets.
With the FOMC yesterday hammering home the point that its policy normalization would be gradual and data dependent, all focus for risk assets and the US Dollar alike is on the December US labor market release on Friday. A "good" US jobs report would be particularly "bad" for the struggling Australian and New Zealand Dollars, as it would signal the removal of stimulus during an emerging time of panic.
--- Written by Christopher Vecchio, Currency Strategist
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