USD Trading Outlook
The AUD has been one of the big losers in the currency markets, alongside the Yen, over the last 24 hours. The Yen was affected by continued soft monetary policy by the BOJ which led to major technical breaks higher in pairs like GBP/JPY and EUR/JPY. The AUD was firstly influenced by weaker-than-expected HSBC china PMI data and then by typical verbal intervention in a speech by Glenn Stevens. Not much on today’s economic calendar so we must look to pre-weekend flows for some volatility.
The USD has enjoyed a modest rally after the Fed minutes suggested that tapering could start in the next few meetings. The language was not very convincing and I wouldn’t be basing any long-term trades off this event. Of much more relevance today will be the HSBC China manufacturing PMI and the BOJ rate decision. Any unexpected developments will lead to volatility in the AUD and JPY crosses.
Messy, choppy markets are still the order of the day and neither fundamentals nor technicals seem to be driving the market. Headlines, like the one from the PBOC yesterday late-afternoon that they will expand the Yuan trading band, are influencing traders. The economic calendar has NZ PPI, Japanese trade data, and a speech by RBA’s Guy Debelle. The recent trend of very tight ranges followed by headline driven spikes is likely to continue.
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