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
EUR/USD
Mixed
Oil - US Crude
Bullish
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
Bullish
GBP/USD
Mixed
USD/JPY
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
More View more
Real Time News
  • What are some technical and fundamental factors affecting the equities market? Get your free forecast here: https://t.co/YQG1aaIT8C #DailyFXGuides https://t.co/oOyN7fUaC6
  • The Federal Open Market Committee (FOMC) Minutes may drag on the price of gold as the central bank appears to be in no rush to switch gears. Get your market update from @DavidJSong here: https://t.co/2EvNplObIk https://t.co/hhEAnqhAEu
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/gNiVpWrd1p
  • 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/4zEwS7mFJE
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/nB2f5m56nq
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/Q0yRRpMpPX
  • Emotions are often a key driving force behind FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here: https://t.co/eILWbFgHRE https://t.co/pSeSiNnmHe
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/iVOEuK40rn
  • Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Learn how to stick to the plan, stay disciplined, and use a checklist here: https://t.co/SQUCCYRCIk https://t.co/ltEO5dpKux
  • WTI crude oil is currently trading up against major resistance via the 2019 and 2020 highs within the confines of a channel; something has to give. Get your market update from @PaulRobinsonFX here: https://t.co/MO9foRjm2y https://t.co/YhBFdvZDEb
Australian Dollar Faces Day Of Reckoning At Fed's Hands

Australian Dollar Faces Day Of Reckoning At Fed's Hands

David Cottle, Analyst
Australian Dollar Faces Day Of Reckoning At Fed's Hands

Fundamental Forecast for Australian Dollar: Bearish

  • The US Federal Reserve will very probably raise interest rates this week
  • When it does, US and Australian rates will have converged
  • With no RBA rate rises even penciled in for months, this could stymie Aussie bulls.

Is there a secret ingredient? What makes a great trader? Check out the DailyFX deep dive into the Traits of Successful Traders

At face value the coming week doesn’t look set to offer the Australian Dollar a lot of support.

There’s a dearth of economic data in any case, with very little indeed due from the currency’s home country. So by the time we get to Friday we’re not likely to know very much about Australia’s performance that we don’t know now.

Of course there’s also the US Federal Reserve’s final monetary policy meeting of the year. The result of that will hit the local newswires early Thursday morning in Asia Pacific. And here again things don’t look good for Aussie bulls. If the Fed does as just about everyone expects then it will raise the Federal funds target rate by a quarter percentage point, to 1.50%. Then it will at long last match the record-low Australian official cash rate and the Aussie dollar’s long-held, post-crisis yield advantage over the greenback will be toast.

Of course this prospect has been just about the best-flagged one in the financial world for months now, so it’s very unlikely that the fact of that rate hike will move AUD/USD very far one way or the other. What probably will, however, is the Fed’s take on how many more rate increases there might be in 2018. This will also be their de facto take on how far the US Dollar will stretch into the realm of yield advantage over the Aussie. After all, rate-futures markets are still reasonably certain that the OCR will still be at 1.50% when we get to New Year’s Eve, 2018.

At present the Fed expects to make three rate increases through the coming year, in addition to December’s. However, there are commentators who think there may yet be more than that. So, all up it’s pretty clear that the Australian Dollar is going to face a bit of pressure. It may get some respite, however, if the Fed evinces more worry about the US economy, and especially about its capacity to produce sustained inflation, than the markets now expect.

The week isn’t quite all about the Fed though. Reserve Bank of Australia Governor Philip Lowe will speak in Sydney on Wednesday. RBA speeches used to be fairly reliable Aussie-weakeners as the central bank usually lost no chance to warn markets of the harmful consequences of too much currency strength. In reality Lowe’s talk could now go either way. If he’s resolutely dovish, and perhaps repeats the RBA’s recent line that rate rises elsewhere place it under no pressure to follow, then AUD/USD could well struggle.

However, if he’s a little more bullish on domestic inflation’s prospects, then the local currency could get a little support.

That said it seems as though the Australian Dollar will have its work cut out to rise far this week so it’s a bearish call, albeit a cautious one.

This long downtrend will take some breaking. It’s unlikely to snap in the week ahead.

Australian Dollar Faces Day Of Reckoning At Fed's Hands

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX

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

DISCLOSURES