USD Soft on Rising Fed Rate Cut Bets, AUDUSD Eyes RBA Rate Cut - US Market Open
MARKET DEVELOPMENT – USD Soft on Rising Fed Rate Cut Bets
USD: The greenback is on the backfoot to begin the week as falling US yields and rising bets of Fed easing weigh on the USD. Fed futures are now pricing in over 80bps worth of easing over the next 12months with several investment banks calling for Fed cuts in the next few months amid rising risks of a slowdown. In turn, the greenback is now hovering around last week’s lows (97.55), focus this week will be on the plethora of Fed speak and whether they will reign in the expectation of Fed easing.
AUD: Notable outperformance in high beta currencies despite the cautious market tone. The AUD is now hovering at 2-week highs against the USD, ahead of the likely RBA rate cut. However, given that markets remain very bearish on the currency, there is a risk of a short vulnerable if the RBA fail to live up to the aggressive dovish pricing. Of note, money markets are pricing in three RBA rate cuts by the year-end.
GBP: The Pound remains soft across the board with EURGBP edging back towards its recent peak (0.8870). Today’s Mfg. PMI surprised to the downside with the headline figure dropping to the lowest level since July 2016 amid the unwind of Brexit related stockpiling. Going forward, the Pound is likely to take its cue from the Conservative Party leadership contest throughout the next few weeks.
Source: DailyFX, Thomson Reuters
WHAT’S DRIVING MARKETS TODAY
- “Sterling (GBP) Week Ahead: Risk, Brexit, NFPs and Flashing Signals” by Nick Cawley, Market Analyst
- “Crude Oil Bulls Exit, Copper and Silver Downtrend Persist - COT Report” by Justin McQueen, Market Analyst
- “S&P 500 and Dow Jones Weakness Failing to Result In a VIX ’Event’” by Paul Robinson, Currency Strategist
- “Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.firstname.lastname@example.org
Follow Justin on Twitter @JMcQueenFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.