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
More View more
Real Time News
  • Further your forex knowledge and gain insights from our expert analysts @ddubrovskyFX and @FxWestwater on JPY with our free Q4 market analysis guide, available for free today.https://t.co/mzeJ5x73N3 https://t.co/lDBYbDLQtZ
  • How does stock market liquidity benefit its traders? Learn more here: https://t.co/FWKyIDUwAw https://t.co/tyoYrsh8mQ
  • 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/4078fnQJON
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/kIIBffEMi7 https://t.co/tt59BU8lnS
  • Quarterly earnings from Netflix and Tesla, two big tech companies, will take center stage next week and could set the trading tone for the S&P 500 and the Nasdaq 100. Get your weekly equities forecast from @DColmanFX here: https://t.co/NOCqjJ3TLd https://t.co/HR5xUZeJXp
  • Do you know the difference between investing and trading? Because while the goal might seem the same, they're very different things . Learn more here.https://t.co/fG6fNEPj9q https://t.co/ymGaYjrl1g
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/FOMcsxci50
  • Further your trading knowledge and gain informed market analyses from our expert analyst @DavidJSong on Oil with our free Q4 guide, available for free today.https://t.co/Y6XECmr5fQ https://t.co/XQI3PN4bkQ
  • Nasdaq 100 may hit new high soon. https://t.co/ACtVqiOBl0
  • HSTECH index has likely formed an "Inverse Head & Shoulders" pattern. https://t.co/YFIQEYmuyq
Australian Dollar to Rise Further as Markets Ponder Fed Outlook

Australian Dollar to Rise Further as Markets Ponder Fed Outlook

Ilya Spivak, Head Strategist, APAC
Australian_Dollar_to_Rise_Further_as_Markets_Ponder_Fed_Outlook_body_Picture_1.png, Australian Dollar to Rise Further as Markets Ponder Fed Outlook

Fundamental Forecast for Australian Dollar: Bullish

  • December’s Australian Jobs Report Unlikely to Derail Stable RBA Outlook
  • Aussie Bounce to Continue as Markets Ponder Fed Policy After Dismal NFP
  • Help Time Key Turning Points for the Australian Dollar with DailyFX SSI

We’ve argued that the Australian Dollar has room to correct higher in early 2014 as the fundamental argument for Aussie weakness becomes increasingly flimsy while speculative traders remain heavily net-short (per futures market positioning data from the CFTC). Absent new evidence to advance the case against the currency, we said a period of profit-taking that drives the Australian unit higher is probably ahead.

Our suspicions appear to be playing out: the Aussie has now completed its first set of back-to-back weekly gains in three months. Looking ahead, the domestic backdrop is little-changed: The priced-in RBA policy outlook remains stable, with data from Credit Suisse showing investors are betting on standstill over the coming 12 months. Next week’s key news-flow seems unlikely to materially change the situation, with December’s Employment data expected to yield a broadly on-trend 10k in hiring.

On the external front, the landscape appears to have improved somewhat. The Aussie has been closely anchored to US treasury yields, falling in lock-step with a rise in borrowing costs as the Fed began to “taper” its QE effort and drove liquidation in yield-sensitive assets. Last week’s dismal US jobs report may force a correction as traders ponder the possibility of a slowdown in stimulus reduction, allowing Treasuries to correct higher and weighing on US borrowing costs. That stands to undo some of the recent deterioration in the Australia-US yield spread, pushing the AUD higher.

Next week’s critical event risks come from the “Fed-speak” calendar. Comments from incoming FOMC voting members Richard Fisher and Charles Plosser – Presidents of the Dallas and Philadelphia branches of the central bank – are likely to be in focus. The Atlanta Fed’s Dennis Lockhart, San Francisco’s John Williams, Richmond’s Jeff Lacker and Chicago’s Charles Evans – all alternate FOMC members for 2014 – are also on tap. To compound the situation further, outgoing chairman Ben Bernanke is also due to speak. Finally, the central bank is set to release its Beige Book survey of regional economic conditions.

All this activity from the Federal Reserve ought to offer plenty of opportunity for speculation about the extent to which policymakers are inclined to pause the “tapering” process or press on with scaling back asset purchases. Realistically speaking, one data point is unlikely to derail the central bank’s medium-term view. A rhetorical shift that underscores the data dependence of QE withdrawal and reiterates the possibility that the process may be slowed or halted if news-flow turns meaningfully sour can force a retracement of recent trends however, adding fuel to the Aussie’s recovery. - IS

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

DISCLOSURES