Talking Points:

  • US Dollar hits one-month high as Fed rate hike bets continue to swell
  • Aussie and New Zealand Dollars, Japanese Yen suffer outsized losses
  • Lull in top-tier economic news flow warns of elevated headline risk

The US Dollar remained on the offensive in Asia Pacific trade, touching the highest level in a month as Fed rate hike speculation continued to build. Tellingly, the currency advanced alongside benchmark US Treasury bond yields. Yield-sensitive currencies at both ends of the rate spectrum – the Australian and New Zealand Dollars at the upper extreme and the Japanese Yen at the lower one – suffered outsized losses.

A lackluster offering of European economic data docket precedes a virtually empty US calendar, leaving the markets without a readily identifiable object for speculation in the near term. That may push sentiment trends to the forefront, although it is unclear what that may entail as baseline FTSE 100 and S&P 500 index futures tread water before London and New York come online.

On balance, it seems as though established trends faces few roadblocks to continuation but may prove likewise starved for fresh fodder after several days of directional development. That might call for a period of consolidation before top-tier event risk re-emerges. The absence of a clear-cut focal point might make for greater sensitivity to headline risk however, warning traders to be wary of seesaw volatility.

Will the US Dollar maintain the recent uptrend through year-end? See our Q4 forecast here!

Asia Session

US Dollar Hits 1-Month High as Aussie and NZ Dollars, Yen Suffer

European Session

US Dollar Hits 1-Month High as Aussie and NZ Dollars, Yen Suffer

** 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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