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US Dollar to Rise if Fed-Speak Cements December Rate Hike Bets

US Dollar to Rise if Fed-Speak Cements December Rate Hike Bets

Ilya Spivak,

Talking Points:

  • US Dollar to rise if hawkish Fed-speak cements December rate hike bets
  • Euro may decline as soft PMI surveys rekindle fears of Brexit contagion
  • NZ Dollar falls on RBNZ view, Pound down as Article 50 trigger nears

The US Dollar outperformed in overnight trade, rising against all of its G10 FX counterparts in a move that appeared corrective following losses in the wake of the FOMC rate decision. The greenback fell as investors focused onthe flattening of the central bank’s projected rate hike path in the immediate aftermath of the policy announcement.

The benchmark unit may continue to build higher into the end of the trading week if scheduled comments from Philadelphia, Cleveland and Atlanta Fed Presidents Harker, Mester and Lockhart echo Chair Yellen’s hawkish tone. The central bank chief all but promised tightening in December at the press conference following this week’s meeting of the rate-setting committee (as expected).

The preliminary set of September’s Eurozone PMI surveys headlines the data docket in European hours. News-flow out of the currency bloc has increasingly deteriorated relative to expectations over the past month, opening the door for soft results. Such outcomes may rekindle worries about the cooling effect of uncertainty following the Brexit referendum, sending the Euro lower.

The New Zealand Dollar lagged the majors in Asian trade, falling alongside front-end bond yields to suggest the move marked follow-through on yesterday’s dovish RBNZ policy announcement. The British Pound also came under pressure after Foreign Secretary Johnson said the UK plans to activate Article 50 of the Treaty of Lisbon “by the early part of next year”, formally starting the Brexit process (although sources within the Prime Minister’s office suggested she hasn’t endorsed this timeline).

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Asia Session

00:30JPYNikkei Japan PMI Mfg (SEP P)50.3-49.5
1:45CNYMNI Business Indicator (SEP)55.8-54.1
4:30JPYAll Industry Activity Index (MoM) (JUL)0.3%0.2%1.0%

European Session

06:10EURRiksbank's Ingves Speaks at ESRB Conf.--Low
06:45EURECB's Constancio Chairs Panel at ESRB Conf.--Low
06:45EURFrance GDP (QoQ) (2Q F)0.0%0.0%Medium
06:45EURFrance GDP (YoY) (2Q F)1.4%1.4%Medium
07:00EURMarkit France Mfg PMI (SEP P)48.548.3Medium
07:00EURMarkit France Services PMI (SEP P)52.052.3Medium
07:00EURMarkit France Composite PMI (SEP P)51.851.9Medium
07:30EURMarkit/BME Germany Mfg PMI (SEP P)53.153.6High
07:30EURMarkit Germany Services PMI (SEP P)52.151.7High
07:30EURMarkit/BME Germany Composite PMI (SEP P)53.653.3High
08:00EURMarkit Eurozone Mfg PMI (SEP P)51.551.7High
08:00EURMarkit Eurozone Services PMI (SEP P)52.852.8High

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.