USD Trading Outlook
AUD/USD recovered along with a generally softening of the USD after the Asian grab-a-thon in response to the hawkish turn in the latest issue of Fed meeting minutes. The US fixed income markets are expecting Ms Yellen's speech at Jackson Hole to be more dovish than the committee's view, which led to some paring of long USD positioning in the NorAm session. The Aussie-US rate differential continues to be fairly stable and thus the Oz is not attracting much attention as some of the other major currency pairs, which offer better trading opportunities. And until the AUDUSD can get legs away from .9300, that will probably continue to be the case.
AUD/USD Sounding like a broken record, but the sideways churn continues. The NorAm session was a mirror image of the previous day, this time with AUDUSD briefly washing out the bottom of the recent range below .9290 before recovering back above .9300 fig. The Fed minutes read more hawkish than the rate markets were pricing the past week, but the tone is tempered by a general state of macro malaise (especially in Europe) since the meeting on July 29-30. The US-AUD rate diff dynamic remains relatively steady. AUD ended the day under some pressure but the pair continues to be trapped by conflicting forces of a broad USD rally and a snappy stock/spread product up-move. Tactical, not strategic, trading remains the best bet for now.
AUD/USD churned sideways in the NorAm session finishing unchanged on the day from Friday's close at .9325. The pair was supported by a snappy global equity rally but capped by a continued slide in commodity prices, ending in a stalemate. Spec longs were trimmed slightly (from +33k to +29k) in the latest reporting week but hope in the carry trade lives on. US yields remained heavy as the bond market prices in a possibility that Ms Yellen presses her dovish bonafides this week at Jackson Hole and shockingly weak European data improves the chances for some form of Euro QE. Tactically, AUDUSD has traced out a fairly tight range between the 200 hma (at .9292) and last week's high at .9335 and the Street doesn't see much risk/reward in pushing it either way before Mr Stevens and the aforementioned Ms Yellen have their say.
AUD/USD After Asia failed to break the pair above structural resistance in the 0.9330/40 area Europe slid the pair down near 0.9315 before a bounce had it just above 0.9320 into NY's open. An early NY lift faded quickly as the USD firmed. AUD/USD slipped to houlry support near 0.9310. That support broke on the Ukraine/Russia headlines and a low of 0.9298 was hit. The effects of the headlines were short lived though. A rebound in risk, lead by equities, allowed AUD/USD to recover some ground. The pair rallied and sat near 0.9325 late in the day. Traders now look to the the RBA for their AUD directional cues now as there is only second tier Oz data due next week. The RBA minutes are released Tuesday and Stevens gives a speech on Wednesday. Jawboning to try and get AUD lower is likely. The US CPI on Tuesday will impact from the USD side. A topside surprise may have the Fed wondering if they'll need to give more weight to prices at future Fed meetings.
Go to U.S. Dollar (USD) Archive