US Dollar May Struggle to Extend Gains on Dovish Fed Comments
- Aussie Dollar gains, Yen weakens as risk-on mood prevails in Asia
- US Dollar may struggle to extend recovery on dovish Fed comments
- Are FX markets matching our forecasts so far in Q3? Find out here
An upbeat mood on most Asian stock exchanges seemed supportive for the sentiment-linked Australian Dollar. On the other side of the spectrum, the anti-risk Japanese Yen declined. The MSCI Asia Pacific regional benchmark equity index added 0.6 percent.
The New Zealand Dollar didn’t match its Aussie cousin’s vigor, moving broadly lower in what may have amounted to pre-positioning for this week’s RBNZ policy meeting. The US Dollar corrected broadly lower in a move that seemed corrective following Friday’s surge in the wake of July’s upbeat jobs report.
From here, a quiet economic calendar in European trading hours is likely to cede the spotlight to comments from Federal Reserve officials. Remarks from St. Louis and Minneapolis branch presidents Jim Bullard and Neel Kashkari are due to cross the wires.
Both policymakers err on the dovish side of the spectrum. That opens the door for rhetoric echoing the markets’ own skepticism about the likelihood of another rate increase in 2017, which might weigh on the greenback. Follow-through seems unlikely until July’s CPI data is revealed on Friday however.
Retail traders expect US Dollar gains. Find out here what this says about actual price moves ahead!
** 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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