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British Pound sinks as EU Brexit negotiator Barnier says there may not be an EU/UK deal

DailyFX Digest: Pound Eyes Carney Speech, Euro Awaits German CPI

DailyFX Digest: Pound Eyes Carney Speech, Euro Awaits German CPI

2017-09-28 00:05:00
DailyFX Research,
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The US Dollar powered higher for a second consecutive day against the broad range of its major counterparts as Fed rate hike speculation continued to head up. Traders now see the probability of another rate hike before year-end at 71.8 percent, up from 63.8 percent a week ago.

The Canadian Dollar suffered the deepest losses against its namesake to the south following dovish comments from BOC Governor Stephen Poloz. He said a rising currency can “complicate” the inflation outlook and stressed policy was not on a predetermined path, implying that a stronger Loonie can derail rate hikes.

DailyFX Economic Calendar: Asia Pacific and Europe

DailyFX Digest: Pound Eyes Carney Speech, Euro Awaits German CPI

A quiet data docket in Asia Pacific hours heats up once Europe comes online with a speech from BOE Governor Mark Carney. The British Pound was battered by kneejerk volatility yesterday and this will perhaps shift the markets’ focus back to rate hike speculation.

The preliminary set of September’s German CPI figures is also on tap. The headline year-on-year inflation rate is expected to remain unchanged at 1.8 percent. The outcome may help drive bets on the likelihood that “tapering” QE asset purchases will begin next month, stoking Euro volatility.

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DailyFX Digest: Pound Eyes Carney Speech, Euro Awaits German CPI

IG Client Sentiment Index Chart of the Day: AUD/USD

DailyFX Digest: Pound Eyes Carney Speech, Euro Awaits German CPI

Retail trader data shows 41.4% of traders are net-long AUD/USD with the ratio of traders short to long at 1.41 to 1. In fact, traders have remained net-short since Jun 04 when AUD/USD traded near 0.74145; price has moved 5.9% higher since then. The number of traders net-long is 19.8% higher than yesterday and 20.2% higher from last week, while the number of traders net-short is 10.9% lower than yesterday and 21.9% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current AUDUSD price trend may soon reverse lower despite the fact traders remain net-short.

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