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US Dollar May Rise as Brainard Feeds Fed Rate Hike Speculation

US Dollar May Rise as Brainard Feeds Fed Rate Hike Speculation

Ilya Spivak,

Talking Points:

  • Yen gains, commodity FX pressured amid risk aversion in Asian trade
  • Risk-off mood seems to be fueled by swelling Fed rate hike speculation
  • US Dollar may rise if Fed’s Brainard echoes colleagues’ hawkish tone

The Japanese Yen outperformed as Asian stocks followed Wall Street lower at the start of the trading week, boosting demand for the anti-risk currency. The sentiment-sensitive Australian, Canadian and New Zealand Dollars faced selling pressure, although the magnitude of overnight moves was relatively restrained.

The risk-off mood seems to reflect firming Fed rate hike bets as a steady stream of hawkish comments from central bank officials paints an increasing sense of consensus on the rate-setting FOMC committee. The spotlight now turns to a hastily-scheduled speech from Governor Lael Brainard, arguably the most dovish of the current crop of voting policymakers.

Brainard will offer the last bit of commentary ahead of the week-long blackout period when Fed officials stay mum ahead an FOMC policy announcement. This offers her an opportunity to set the tone for speculation in the near term. If she echoes the tone adopted by her colleagues in recent weeks, an up-shift in the projected rate hike path is may boost the US Dollar and undermine sentiment trends further.

Losing money trading in the FX market? This may be why.

Asia Session

23:50JPYMachine Orders (MoM) (JUL)4.9%-2.9%8.3%
23:50JPYMachine Orders (YoY) (JUL)5.2%0.3%-0.9%
23:50JPYPPI (MoM) (AUG)-0.3%-0.1%0.0%
23:50JPYPPI (YoY) (AUG)-3.6%-3.4%-3.9%
1:30AUDCredit Card Purchases (JUL)A$23.6b-A$25.5b
1:30AUDCredit Card Balances (JUL)A$51.3b-A$52.2b
6:00JPYMachine Tool Orders (YoY) (AUG P)--19.7%

European Session

8:00EURItaly Unemployment Rate Quarterly (2Q)11.5%11.6%Low
8:00CHFTotal Sight Deposits -515.8bLow
8:00CHFDomestic Sight Deposits -438.7bLow

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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