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
EUR/USD
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
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.39% France 40: 0.32% FTSE 100: 0.26% US 500: 0.01% Wall Street: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/ljSeRVDbh8
  • Gilead Sciences receives FDA approval for Remdesivir - BBG
  • $GILD | Gilead Sciences receives FDA approval for coronavirus treatment remdiesivir
  • https://t.co/WnuPTDjq0J
  • Can bulls continue to push? While the bullish theme in Gold remains on hold, buyers haven’t been so bashful around Bitcoin. Get your $btc technical analysis from @JStanleyFX here:https://t.co/yLoAnTe6Py https://t.co/HD2spNq4FC
  • Precious Metals Update: #Gold 1904.24 (-1.04%), #Aluminum 1843.50 (+0.49%), and #Copper 6991.50 (+1.34%) [delayed]
  • US Dollar volatility remains heightened in the midst of back-and-forth stimulus negotiations. Get your $USD market update from @RichDvorakFX here:https://t.co/CfpaGfgTrq https://t.co/YCU6VIjlwX
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.00% Gold: -1.08% Silver: -1.58% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/V3riWytkHs
  • some interesting $BTC charts though. Even as Gold and Silver remain in sluggish digestion patterns, Bitcoin just launching higher through some big res. PTJ singing the praises prob didn't hurt #Bitcoin $BTCUSD https://t.co/nC9cKkcbNe https://t.co/NC4Hqd8qoH
  • Fiscal updates are basically the new trade war updates. https://t.co/3P01Ys8Qgr
Australian Dollar at Risk as Markets Rethink Post-FOMC Reaction

Australian Dollar at Risk as Markets Rethink Post-FOMC Reaction

2014-06-21 02:13:00
Ilya Spivak, Head Strategist, APAC
Share:
Australian Dollar at Risk as Markets Rethink Post-FOMC Reaction

Fundamental Forecast for Australian Dollar: Bearish

  • RBA Minutes Spark Renewed Deterioration in RBA Policy Expectations
  • Aussie Dollar Weakness Likely as Post-FOMC Price Action is Unwound
  • Help Identify Critical Turning Points for AUD/USD with DailyFX SSI

The Australian Dollar stumbled after three consecutive weeks of gains, failing to mount a sustained push above 0.94 figure against its US counterpart yet again. As we expected, minutes from June’s RBA meeting proved to be a major hurdle as policymakers added color to a seemingly status-quo policy announcement with decidedly dovish rhetoric. This led the Aussie sharply lower as rate hike bets unwound, with a Credit Suisse gauge tracking investors’ priced-in 12-month policy outlook dropping to the lowest level in nearly three weeks.

Downside follow-through proved limited however, with the Aussie mounting a swift recovery in the aftermath of the FOMC policy announcement. Investors looked beyond a generally upbeat statement from the rate-setting committee and an even-handed performance from Chair Yellen at her quarterly press conference to focus on a sharp downgrade in officials’ 2014 GDP growth outlook. The Fed’s central projection now sees the upper bound on growth this year at 2.3 percent, an dramatically lower number than the 3 percent estimate given in March. Traders seemed to interpret this to mean that interest rate hikes are becoming an increasingly distant prospect following the end of QE3 asset purchases expected in the fourth quarter.

Such sentiments may be short-lived. A cutback in 2014 growth bets reflecting the widely-known slump in the first quarter should not to be surprising for market participants at this point. Investors also ought to find it telling that the Federal Reserve has conspicuously opted not to alter the policy normalization process after the downturn, arguing the soft patch was a transitory aberration rather than a real threat to recovery. Put simply, this means the 2014 GDP growth downgrade reflects old news rather than a new piece of the puzzle that is likely to alter the course of policy going forward. On the contrary, a particularly chipper tone in the policy statement and a hawkish shift in baseline rate hike expectations are far more noteworthy.

The week ahead will bring plenty of opportunities for the markets to reconsider their initial FOMC reaction. A slew of economic indicators including home sales, consumer confidence, durable goods orders, and PMI figures are on tap. The trend in US economic news-flow marked an important upturn relative ton consensus forecasts in early April and has broadly (if unevenly) continued to improve since. More of the same from upcoming releases may show investors they ought to be looking ahead to shape their Fed outlook, not dwelling on backward-looking reflections of weakness that policymakers have already dismissed. Scheduled commentary from regional Fed Presidents Plosser, Williams, Lacker and Bullard may help this cause. This means post-FOMC moves across the asset class spectrum may be swiftly unwound, sending the Aussie lower in the process.

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

DISCLOSURES