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.

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
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
Bullish
USD/JPY
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
  • NYC Mayor De Blasio says the city does not want National Guard troops to help with protests $SPX
  • Trump will meet soon with advisors to talk about new relief bill - DJ via BBG
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.24% 🇳🇿NZD: 1.03% 🇨🇦CAD: 0.56% 🇪🇺EUR: 0.46% 🇨🇭CHF: -0.07% 🇯🇵JPY: -0.80% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/XNw8pkSsXa
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: 1.98% Germany 30: 1.33% FTSE 100: 0.81% Wall Street: 0.71% US 500: 0.35% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/J2WnVIkNxh
  • Trump says a COVID-19 vaccine is coming along really well, along with therapeutics $SPX
  • President Trump to speaking to the market's interests optimism of a expedited economic reopening, but not a lot of detail to gain traction around https://t.co/gc54MZMtuG
  • The $DXY Dollar Index is often a mirror of EURUSD - as the benchmark cross accounts for a vast majority of the trade-weighted index. The DXY is also down 6 straight trading days, but it hasn't seen a 7th since October 2007 https://t.co/ipeUVxqHOj
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.60% Gold: 0.25% Silver: -0.25% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nBg1O9AB2c
  • GBP/USD has broken convincingly to the upside from a symmetrical triangle chart pattern, implying that further gains can be expected. Get your $GBPUSD technical analysis from @MartinSEssex here: https://t.co/tsEeGa8kAd https://t.co/yOhxlK2crH
  • Have to say, the $GBPUSD's observation of the 200-day moving average is convenient for tech observers. Also helps that it is almost horizontal https://t.co/8DGvfn5nkx
Australian Dollar May Turn Lower on FOMC Outcome, Jobs Data

Australian Dollar May Turn Lower on FOMC Outcome, Jobs Data

2016-03-12 03:49:00
Ilya Spivak, Head Strategist, APAC
Share:
Australian Dollar May Turn Lower on FOMC Outcome, Jobs DataAustralian Dollar May Turn Lower on FOMC Outcome, Jobs Data

Fundamental Forecast for the Australian Dollar: Neutral

  • Australian Dollar surged to 11-month high vs. US counterpart last week
  • Hawkish cues in FOMC announcement may hurt risk appetite, sink Aussie
  • Soft employment figures may rekindle RBA interest rate cut speculation

What do DailyFX analysts expect from the Australian Dollar in 2016? See our forecast to find out!

The Australian Dollar continued to press upward last week, rising to the highest level in 11 months against its US counterpart. The velocity of the move has been undeniably impressive: prices have now completed the biggest two-week rally in 4.5 years. Favorable risk appetite trends fueled the latest advance. Share prices continued to recover from lows set in mid-February, spurred on by aggressive expansion of ECB stimulus. The S&P 500 stock index – a benchmark for global sentiment – has now nearly erased its year-to-date decline.

Risk trends are likely to remain central in the week ahead as the Federal Reserve takes it turn to deliver a monetary policy announcement. This time around, the policy statement will be accompanied by an updated set of economic forecasts and interest rate projections as well as a press conference with Chair Janet Yellen. A rate hike is almost certainly not in the cards: Fed Funds futures imply a 96.1 percent probability of staying within the current 25-50 basis point range for the benchmark lending rate. This puts the onus on forward guidance and mismatch between the central bank’s outlook and that of the markets.

Investors have been decidedly more pessimistic than Fed officials. When the FOMC projected four rate hikes in 2016 as it issued its first post-QE increase late last year, priced-in expectations envisioned just two. The subsequent turmoil in financial markets through the first quarter hasn’t helped matters. Traders briefly abandoned bets on even one 25bps up move in mid-February. The outlook has recovered a bit alongside stock prices and the markets now put the Fed Funds rate at 67bps by year-end, meaning they see one hike from the current setting into the 50-75bps range.

For its part, the Fed has continued to make progress on its mandate. Since the start of the year, the unemployment rate has dropped to 4.9 percent, the lowest in eight years. Meanwhile, the core PCE gauge of inflation – the Fed’s favored price growth indicator – jumped to 1.7 percent in January, the highest in three years and within a hair of the Fed’s target of 2 percent. Most critically, this happened before the start of a pullback in the US Dollar and a rebound in crude oil prices in early February. Both have been important headwinds for prices. While explicit energy costs are factored out of core inflation data, its impact still bleeds into the reading because it is an input in the production of many other goods.

On balance, this means that the US central bank has a compelling argument to tighten further. Tactically speaking however, doing so this time around seems unwise. The disconnect between the Fed’s view and that of investors means tightening now would probably trigger panic. Market participants will have to be pushed to acclimate to further stimulus withdrawal however, meaning the FOMC shall have to fine-tune its language to be both reassuring and decidedly more hawkish than status-quo bets envision. This will probably weigh against risk appetite as portfolios adjust, sending the Aussie Dollar lower alongside share prices.

February’s Employment report takes top billing on the domestic front, with a net 12k jobs gain expected. This would mark an improvement from January’s 7.9k job loss but fall short of trend averages running above 20k/month. Furthermore, Australian news-flow has tended to underperform relative to consensus forecasts over recent weeks, opening the door for a downside surprise. The RBA has maintained a neutral data-dependent posture, a stance likely to be reinforced in minutes from the March policy meeting to be released next week. With that in mind, a soft result may rekindle near-term rate cut speculation, compounding any sentiment-driven weakness facing the Aussie.

.

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

DISCLOSURES

News & Analysis at your fingertips.