US Dollar May Fall Further on Cautious Fed Commentary
- Aussie Dollar falls as bond yield drop hints RBA outlook eroding
- Yen edges lower as Asian stocks recover after blistering selloff
- US Dollar may extend decline on Yellen, Kashkari commentary
The Australian Dollar underperformed in overnight trade, falling alongside local front-end bond yields. That speaks to a dovish shift in RBA monetary policy bets, though a standalone catalyst triggering it is not immediately apparent.
The Yen declined as Asian stocks recovered a bit of lost ground following yesterday’s blood-letting. The MSCI Asia Pacific regional benchmark equity index fell 1.25 percent, the most in over three months. The slight improvement in sentiment put pressure on the perennially anti-riskJapanese unit.
A lackluster European data docket will probably see the markets looking ahead to Fed commentary for direction. Remarks from Chair Janet Yellen and Minneapolis branch President Neel Kashkari – the sole FOMC vote against this month’s rate hike – are due to cross the wires.
Yellen’s pronouncements are famously measured and Kashkari is emerging as a prominent dove. That means their words are unlikely to change the minds of investors questioning the Fed’s hawkish conviction since last week’s meeting. Another timid showing may compound recent pressure on the US Dollar.
Retail traders are long the US Dollar. What does that say about the trend? Find out here!
** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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