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.

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
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
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
Gold
Mixed
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
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • Number of DAX 30 index members to be increased to 40 from 30 - BBG $DAX
  • Hong Kong to close bars and nightclubs - BBG $HKD $HSI
  • WTI crude oil prices extend gains on positive vaccine news and the kickoff of the US presidential transition process. An Astra-Oxford coronavirus vaccine could be deployed as soon as next month following successful clinical trials, marking a third promising candidate in a month. https://t.co/blvE4cTHqu
  • 🇫🇮 Unemployment Rate (OCT) Actual: 7.4% Previous: 7.6% https://www.dailyfx.com/economic-calendar#2020-11-24
  • Heads Up:🇫🇮 Unemployment Rate (OCT) due at 06:00 GMT (15min) Previous: 7.6% https://www.dailyfx.com/economic-calendar#2020-11-24
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 94.04%, while traders in NZD/USD are at opposite extremes with 73.89%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/vXLz7kjiM8
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.63% 🇦🇺AUD: 0.40% 🇨🇦CAD: 0.30% 🇪🇺EUR: 0.08% 🇨🇭CHF: 0.06% 🇯🇵JPY: 0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/abCq8SaK0H
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.93% US 500: 0.83% Germany 30: 0.67% France 40: 0.63% FTSE 100: 0.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2VKcUkmow6
  • The US Dollar extended breakouts against the Singapore Dollar and Malaysian Ringgit. USD/IDR and USD/PHP are more resilient as they idle around key support zones. Get your market update from @ddubrovskyFX here:https://t.co/SNMMCF4hh0 https://t.co/yVZlX5XALy
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your USD/CHF market update here:https://t.co/m2hAK8TiMS https://t.co/qjxm6K3qzT
Australian Dollar at Risk Absent Dovish Shift in FOMC Rhetoric

Australian Dollar at Risk Absent Dovish Shift in FOMC Rhetoric

2013-10-26 01:16:00
Ilya Spivak, Head Strategist, APAC
Share:
Australian_Dollar_at_Risk_Absent_Dovish_Shift_in_FOMC_Rhetoric_body_Picture_1.png, Australian Dollar at Risk Absent Dovish Shift in FOMC Rhetoric

Australian Dollar at Risk Absent Dovish Shift in FOMC Rhetoric

Fundamental Forecast for Australian Dollar: Bullish

  • Australian Dollar Long Position Held as Prices Meet Resistance Above 0.97
  • Risk Aversion a Threat Absent Dovish Turn in Post-Shutdown FOMC Rhetoric
  • DailyFX SSI Flips as Speculative Sentiment Balance Turns Against Aussie

We’ve argued in favor of a significant Australian Dollar recoverysince early August. We thought improvingeconomic news-flow will help arrest the slide Chinese economic growth expectations, boosting the outlook for Australia’s mining sector exports and prompting an Aussie-supportive shift in RBA policy bets. The case for an upside scenario seemed all the more compelling against a backdrop ofhighly over-extended speculative net-short positioning and we proceeded to enter long AUD/USD after an attractive technical setup presented itself.

Prices turned higher as expected, with the latest COT positioning data pointing to swift short-covering. The back-story behind the move is reflecting our baseline scenario. Chinese economic growth expectations not only stopped falling, but the median 2013 forecast was upgraded (from 7.5 to 7.6 percent) in September. Meanwhile, the priced-in RBA policy outlook no longer sees any interest rate cuts over the coming 12 months (according to data compiled by Credit Suisse).

A lingering sensitivity to risk appetite trends remains a threat however. AUD/USD shows a notable correlation the MSCI World Stock Index, a proxy measure of broad-based market sentiment. That makes for a vulnerability to the outbreak of risk aversion as investors attempt to nail down the timing of the first move to “taper” Fed QE asset purchases in the aftermath of this month’s US government shutdown.

The emerging consensus seems to now call for the Fed to begin stimulus reduction in March 2014 as fiscal retrenchment hobbles the economy and derails earlier plans to begin stimulus withdrawal sometime late this year. The incorporation of this view into asset prices has pushed the S&P 500 to a new record high while sending the US Dollar sharply lower against its top counterparts, including the Aussie.

That suggests the markets are already pricing in the new timeline, meaning outsized volatility risk now comes from any indication that tapering may begin sooner rather later. Recalling the ultimately unfounded fears of the fiscal drag from an increase in payroll tax withholding and the “sequester” spending cuts on the US recovery earlier this year, the possibility that worries about the shutdown’s impact are overstated seems quite real.

While it shall be some time before hard economic data can give a clear reading on the shutdown’s real economic impact, next week’s FOMC policy meeting will be key in gauging whether Fed officials are as convinced as the financial markets of the need for a longer-term delay in policy normalization. The absence of a discernible shift in the policy statement’s rhetoric may suggest otherwise, weighing on risky assets and pulling the Aussie lower in tandem.

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

DISCLOSURES