News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/hqW38VawJl
  • - Unreal atmosphere - Shame about the result, but no complaints - Usyk masterclass - Heavyweight division blown wide open https://t.co/BKCLJTDk9h
  • The USD could still rally a bit from here, but has resistance not far ahead that it will need to overcome if it is to extend to a larger degree. Get your weekly $USD technical forecast from @PaulRobinsonFX here: https://t.co/n0CVWWOJDe https://t.co/0uLjsQ2gwM
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/nfiFAlyYXv
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0unrdT https://t.co/mIsVJ4zTbB
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/hymrumanUY
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfs2Iz https://t.co/6dAqxsVfxJ
  • The results of this weekend’s German Federal Election will likely dominate Euro sentiment at the start of the week ahead but after a possible EUR/USD bounce they will have little long-term impact. Get your weekly $EUR forecast from @MartinSEssex here: https://t.co/Xu3ZT7EtrW https://t.co/5VHKn52MaA
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here: https://t.co/nAa0fHq4Np https://t.co/mf9rsmIvaW
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/mYWO0Eta0P
Australian Dollar Outlook: AUD/USD Divergence With Wall Street Risks Continuing

Australian Dollar Outlook: AUD/USD Divergence With Wall Street Risks Continuing

Daniel Dubrovsky, Strategist

Australian Dollar Fundamental Forecast: Neutral

  • Australian Dollar may struggle to capitalize on rosy market mood
  • Falling inflation bets and local bond yields sapping AUD’s appeal
  • Focus on the Fed’s tapering outlook and RBA meeting minutes next

All things considered, it has been pretty quiet for the sentiment-linked Australian Dollar. AUD/USD one-week implied volatility continues to aim lower from late February peaks. The currency continues to trade broadly sideways against its major peers, but with a very slight downside bias since finding a top earlier this year. This is despite market mood remaining fairly stable and upbeat, something that tends to benefit AUD.

So, what gives and will this trend continue? Monetary policy expectations are likely playing a key role here. The decline in longer-term Treasury yields is not just isolated to the United States, but it has been spilling over to Australia. The local 10-year rate aimed for the worst weekly performance in about one year as Australian inflation expectations eased.

This was in the aftermath of this month’s RBA rate decision, where the central bank further cooled hopes of sooner-than-anticipated policy tapering. This is likely weighing against the Australian Dollar, preventing it from capitalizing on the rise in the S&P 500 and progress in Chinese equities. Due to Australia’s key trading relationship with China, market sentiment from the latter can make its way into the latter.

With that in mind, this environment is likely shaping up for another quiet reaction to Australia’s next jobs report on Thursday local time. More focus may be given to the RBA meeting minutes, where the Aussie is likely vulnerable to further dovish commentary. The Aussie will also be tuning in for a speech from the central bank’s governor, Philip Lowe, hours before the jobs report.

Arguably, the most important event risk will likely come from the United States. The Federal Reserve will be hosting its next monetary policy announcement. Markets will be focusing on updated interest rate projections, and Chair Jerome Powell will almost surely be asked about where the Fed stands on tapering policy. Reiterating that inflation is transitory, especially amidst May’s high CPI report, may keep sentiment stable.

Australian Dollar Index Versus Wall Street and AU 10-Year Government Bond Yield

Australian Dollar Outlook: AUD/USD Divergence With Wall Street Risks Continuing

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

DISCLOSURES