USD Trading Outlook
Reports started to emerge from the US yesterday afternoon that a debt-deal of sorts might soon be signed and postpone any talk of an imminent default. This led to a surge in typical ‘risk-on’ trades like AUD/JPY. Today will be all about positional adjustment ahead of the weekend. There isn’t much of note on today’s economic calendar but we will need to be wary of juicy headlines on the newswires relating to the debt negotiations. The G20 FinMins are also meeting today.
The Australian unemployment data is due out later this morning and will be today’s key risk event. Any movement is likely to be short-lived as I cannot see the data impacting much on monetary policy at a time when so many other events are happening. The confirmation of Janet Yellen as next Fed Chairperson gave the USD a boost across the board but the AUD/USD didn’t fall much as risk-trades also rose.
The FX market remains in Limbo as the US government shutdown continues and the countdown towards October 17th, and a possible US government default on some debt obligations, ticks away. There was some movement in crosses like GBP/AUD as traders preferred to trade non-USD pairs. Australian consumer confidence data might be good for a bit of volatility but I think we can expect another quiet session (unless the large reported stops in USD/JPY below 96.50 go off).
Australian markets are closed today and with China also still closed, we can expect a quiet day. Friday was most notable for adjustments in the crosses with the heavily over-bought GBP market finally starting to retrace whilst the Yen and commodity currencies made some decent gains. The US budget impasse is likely to be resolved in coming days with the debt-ceiling needing to be raised by October 17th, otherwise they could start defaulting on some debt obligations.
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