Volatility Around Dollar to Rise as Taper Speculation Sinks Global Markets
The July FOMC Minutes boosted the US Dollar its highest level in weeks as it appeared QE3 would be tapered in September. However, without the taper, the buck might fall. Expect volatility to pick up as the September 19 FOMC meeting approaches.
Though we have yet to see the wave of deleveraging wash over US equities – the stronghold of moral hazard – we have nonetheless seen a significant market adjustment to the September Fed Taper.
A recent downturn in Japanese growth data could provoke further stimulus from the Bank of Japan. A key piece of data this week will offer a potential bearish spark for the Yen.
The British Pound fell back from a fresh monthly high of 1.5716 even as the preliminary 2Q GDP report showed an upward revision in the U.K. growth rate.
For the third consecutive week, gold prices are firmer with the yellow metal advancing more than 1.42% to close at $1396 in New York on Friday.
The Australian Dollar is expected to recover from Augusts’ low absent interference from speculation about the Federal Reserve’s intention to “taper” its QE effort.
Use the DailyFX-Plus Technical Analyzer to identify possible trade setups.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.