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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.

DailyFX Webinar Calendar

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.

Five Things Traders are Reading

  1. New Zealand Dollar Falls as RBNZ Holds Rates and Changes GDP View by Daniel Dubrovsky, DailyFX Team
  2. Strong Weak FX: US Dollar Shows Strength, CAD Weakens on BoC Caution by Tyler Yell, FX Trading Instructor
  3. EUR/USD Snaps Near-Term Range, Initiates Bearish Sequence by David Song, Currency Analyst
  4. Trading Outlook for the Dollar, Cross-rates, Gold & Equity Indices by Paul Robinson, Market Analyst
  5. Bitcoin and Ethereum Continue to March Higher by Nick Cawley, Analyst

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