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US Dollar Looks to Fed-Speak for Direction After Falling Most in a Year

US Dollar Looks to Fed-Speak for Direction After Falling Most in a Year

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar Corrects Higher Overnight, Looks for Next Lead in Fed Commentary
  • Aussie Dollar Underperforms as 2-year Yields Drop to Weakest in Two Months
  • Place Economic Releases Directly on Your Charts with the DailyFX News App

The US Dollar outperformed in overnight, rising as much as 0.3 percent on average against its leading counterparts. The move appeared corrective after the greenback’s dismal performance in the preceding 24 hours. The benchmark currency slid 0.9 percent, marking the largest daily drawdown in a year.

The Australian Dollar proved weakest on the session, sliding alongside front-end bond yields. The return on Australia’s 2-year bond slid to a low of 2.472 percent, the weakest in two months, as global slowdown fears weighed against RBA rate hike bets and fueled demand for fixed income instruments.

Looking ahead, a quiet economic calendar in European trading hour is likely to put “Fed-speak” in the spotlight. Philadelphia Fed President Plosser and Minneapolis Fed President Kocherlakota – both members of the rate-setting FOMC – will be in focus. Comments from Atlanta Fed President Lockhart and St. Louis Fed President Bullard are also set to cross the wires.

Needless to say, traders will be most keen to gauge the probability of delaying the first post-QE3 interest rate hike amid swelling global downturn worries. As it stands, Fed Funds futures suggest the markets no longer expect tightening until early 2016. Concerned rhetoric akin to remarks from Fed Vice Chair Fischer earlier in the week may prove painful for the US unit, whereas a more sanguine approach will probably offer support.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:00

NZD

ANZ Job Advertisements (MoM) (SEP)

2.4%

-

1.7%

21:30

NZD

BusinessNZ Manufacturing PMI (SEP)

58.1

-

57.0

0:00

AUD

Consumer Inflation Expectation

3.4%

-

3.5%

0:30

AUD

RBA FX Transactions - Market (A$) (SEP)

910M

-

381M

0:30

AUD

RBA FX Transactions - Other (A$) (SEP)

115M

-

77M

0:30

AUD

RBA FX Transactions - Gov't (A$) (SEP)

-1017M

-

-408M

2:00

CNY

Foreign Direct Investment (YoY) (SEP)

1.9%

-14.0%

-14.0%

2:01

CNY

Foreign Reserves ($) (SEP)

3890.0B

4009.5B

3993.2B

2:01

CNY

New Yuan Loans (SEP)

857.2B

750.0B

702.5B

2:01

CNY

Aggregate Financing RMB (SEP)

1050.0B

1150.0B

957.4B

2:01

CNY

Money Supply M2 (YoY) (SEP)

12.9%

13.0%

12.8%

4:00

JPY

Tokyo Condominium Sales (YoY) (SEP)

-44.1%

-

-49.1%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

5:45

CHF

SECO October 2014 Economic Forecasts

-

-

Medium

9:00

EUR

Eurozone Trade Balance (€) (AUG)

-

21.2B

Low

9:00

EUR

Eurozone Trade Balance s.a. (€) (AUG)

13.3B

12.2B

Low

9:00

EUR

Eurozone CPI (MoM) (SEP)

0.4%

0.1%

Medium

9:00

EUR

Eurozone CPI (YoY) (SEP F)

0.3%

0.3%

Medium

9:00

EUR

Eurozone CPI - Core (YoY) (SEP F)

0.7%

0.7%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.2261

1.2522

1.2680

1.2783

1.2941

1.3044

1.3305

GBPUSD

1.5602

1.5795

1.5908

1.5988

1.6101

1.6181

1.6374

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

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

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