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lunedì 29 agosto 2016

US Dollar Posture Improves as December Rate Hike Odds Jump


Talking Points:

- Fed funds now pricing in a 65% chance a Fed hike in December.

- EUR/USD, AUD/USD, and GBP/USD all posted bearish outside engulfing bars on Friday.


- August is typically a bad month for risk and a good month for the US Dollar - see the August forex seasonality report.

It's a quiet day thus far in FX markets, with the UK on bank holiday and with it generally being the last 'unofficial' week of summer (Memorial Day to Labor Day). The good news for traders is that the return of market participants should help revive volatility, which, but for Friday's dramatic (and important) price developments, was flagging at multi-year lows (pre-January 2015 SNB!).

Yet developments on Friday cleared have played into the US Dollar's favor, with the odds of a December 2016 rate hike having jumped from 44% on Thursday to 65% by the time the closing bells rang on Friday. With a significant economic calendar in store for the next few days for the US economy, there is a window of opportunity for markets to shift their expectations from a hawkish hold to perhaps an outright rate hike.

See the video (above) for technical considerations in EUR/USD, GBP/USD, AUD/USD, USD/JPY, and the USDOLLAR Index.


Read more: US Dollar Breaks Out of Low Vol Slumber


--- Written by Christopher Vecchio, Currency Strategist


To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com


Follow him on Twitter at @CVecchioFX


To be added to Christopher’s e-mail distribution list, please fill out this form


US Dollar Posture Improves as December Rate Hike Odds Jump
US Dollar Posture Improves as December Rate Hike Odds Jump
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ForexLive European morning FX news wrap: Steady as she goes as another week gets underway

Forex news and economic trading headlines 29 August 2016


News:


Data:


UK holiday today and it appears that European traders have taken the opportunity to have a breather too.


Yen-demand the main feature as USDJPY runs into resistance at 102.50 and traders take some short-JPY positions off the table after a decent run higher post-Jackson Hole.


More summary to follow.




ForexLive European morning FX news wrap: Steady as she goes as another week gets underway
ForexLive European morning FX news wrap: Steady as she goes as another week gets underway
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Il dollaro sale contro i rivali tra le speranze di un aumento dei tassi

Dollaro al massimo di 2 settimane contro i rivali dopo i commenti della YellenDollaro al massimo di 2 settimane contro i rivali dopo i commenti della Yellen


Investing.com - Il dollaro sale contro le altre principali valute questo lunedì, tra le speranze di un aumento dei tassi statunitensi da parte della Federal Reserve che supportano il biglietto verde.


Il cambio EUR/USD è stabile a 1,1188, staccandosi dal minimo di due settimane di 1,1172 segnato nella notte.


Durante il simposio di Jackson Hole, venerdì, la presidente della Fed Janet Yellen ha dichiarato che le probabilità di un aumento dei tassi di interesse USA “sono aumentate” negli ultimi mesi grazie al miglioramento del mercato del lavoro ed alle aspettative di una crescita economica solida.


Tuttavia, la Yellen non ha dato indicazioni sulla tempistica, dichiarando che l’aumento dei tassi di interesse dipenderà dai prossimi dati economici.


Intervenendo poco dopo, il vice presidente della Fed Stanley Fischer ha dichiarato che il discorso della Yellen è “coerente” con le aspettative di due aumenti dei tassi per quest’anno, aprendo alla possibilità di un aumento a settembre.


La coppia GBP/USD scende dello 0,28% a 1,3102, il minimo dal 22 agosto.


Il cambio USD/JPY è in salita dello 0,37% a 102,17, mentre la coppia USD/CHF scende dello 0,10% a 0,9774.


Il dollaro australiano è in calo, con la coppia AUD/USD giù dello 0,16% a 0,7552 ed il cambio NZD/USD è stabile a 0,7237.


Intanto, la coppia USD/CAD è pressoché invariata al massimo di due settimane di 1,3006.


L’Indice del Dollaro USA, che replica l’andamento del biglietto verde contro un paniere di altre sei principali valute, sale dello 0,10% al massimo di due settimane di 95,58.



Il dollaro sale contro i rivali tra le speranze di un aumento dei tassi
Il dollaro sale contro i rivali tra le speranze di un aumento dei tassi
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Il polso dei mercati azionari fino al 30 dicembre

Wall Street è in uptrend di medio lungo termine ed al momento, il suo percorso previsionale come da nostro frattale decennale (Figura 1), ci fa ritenere che il rialzo possa continuare nei prossimi mesi ed anni.

(Figura 1 Frattale previsionale decennio 2011/2020 per i mercati americani)

mappa
mappa



Oggi vogliamo fare il punto della situazione ed analizzare i più importanti mercati internazionali e rispondere alla seguente domanda:

"i mercati europei hanno segnato i loro minimi di lungo periodo?"

Quali valori monitorare per giungere ad una risposta esaustiva e imparziale?Ecco come si presenta la situazione tecnica annuale ed il trend in atto dei maggiori Indici internazionali:
Future Ftse Mib

Trend ribassista. Possibili rimbalzi fino all’area 17.615/17.830. Il trend diventa rialzista solo con chiusure settimanali superiori ai 18.275. Long sopra 18.275. Short sotto 17.615.
Future Dax

Trend rialzista. Possibili ritracciamenti fino all’area 9.878/9.766. Il trend diventa ribassista solo con chiusure settimanali inferiori ai 9.719. Long sopra 9.878. Short sotto 9.719.
Future Eurostoxx

Trend rialzista. Possibili ritracciamenti fino all’area 2.907/2.865. Il trend diventa ribassista solo con chiusure settimanali inferiori ai 2.827. Long sopra 2.907. Short sotto 2.827.
S&P 500

Trend rialzista. Possibili ritracciamenti fino all’area 2.020/2.002. Il trend diventa ribassista solo con chiusure daily inferiori ai 1.998. Long sopra 2.020 Short sotto 1.998.

Cosa si nota?

S&P 500, Future Dax e Future Eurostoxx, presentano per il momento un uptrend di medio periodo. Piazza Affari, invece non ha ancora accantonato per il momento, la formazione di possibili nuovi minimi.

In questo articolo, e nei numeri enunciati ed indicati, c'è tutto quanto serve per leggere il futuro dei mercati fino al 30 Dicembre . Però ribadiamo come già fatto in articoli precedenti: verranno mercati molto difficili e se non si è bravi a togliere il rumore di fondo, "si prenderanno fischi per fiaschi!"

Il polso dei mercati azionari fino al 30 dicembre
Il polso dei mercati azionari fino al 30 dicembre
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European equity markets open lower 29 Aug

Softer tones on the official opening following the futures markets 29 Aug


  • DAX  -0.8%

  • CAC40 -0.5%

  • FTMIB -0.4%

  • IBEX -0.6%

In SCI and CS130 Index both close flat.


European equity markets open lower 29 Aug
European equity markets open lower 29 Aug
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domenica 28 agosto 2016

EUR/USD Technical Analysis: Down Trend May Be Resuming


To receive Ilya's analysis directly via email, please SIGN UP HERE


Talking Points:


  • EUR/USD Technical Strategy: Short at 1.1207


  • Euro breaks monthly uptrend, hints dominant down move is resuming


  • Short position triggered, targeting just below 1.11 figure vs. US Dollar


The Euro declined against the US Dollar as expected afterputting in a bearish Harami candlestick pattern following a test of trend line support-turned-resistance. A break of support guiding prices higher since late July now hints the longer-term down trend is resuming.


From here, a break below the 38.2% Fibonacci expansion at 1.1097 opens the door for a test of the 50% level at 11014. Alternatively, a daily close above resistance in the 1.1200-15 area (23.6% Fib, trend line) sees the next upside barrier at 1.1263, the 14.6% expansion.


An intraday gap-filling bounce has offered acceptable risk/reward parameters and a short trade has been triggered at 1.1207, initially targeting 1.1097. A stop-loss will be activated on a daily close above 1.1263.Half of the position will be booked and the stop-loss trailed to breakeven when the first objective is met.


What do past EUR/USD price patterns hint about where prices are going? Find out here!

EUR/USD Technical Analysis: Down Trend May Be ResumingEUR/USD Technical Analysis: Down Trend May Be Resuming
EUR/USD Technical Analysis: Down Trend May Be Resuming
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ASX 200 Technical Analysis: Index Falling After 5,500 Break


Talking Points:


- Index trading below support at 5,500 after a push to the downside


- Price has been trading sideways between 5,500 and 5,570 since the beginning of the month


- Focus might shift to 5,380-5,400 on a hold below 5,500


Showcase your trading skills against your peers in FXCM's $10,000 Monthly Challenge Here, but learn good trading habits with the “Traits of successful traders” series


The ASX 200 is trading lower at the time of writing, after the index failed to establish new 2016 highs following a rejection at a resistance area between 5,570 and 5,600.


The Index was trading sideways since the beginning of the month, between the 5,500 support and the 5,600 resistance area, which means that if the tentative break below 5,500 holds, focus might shift to possible support around the 5,380-5,400 area.


This makes the 5,380-5,400 area potentially key for any bullish intentions going forward, as a hold above those levels may still imply that the downside move was corrective, while a break below might be interpreted as a bearish sign.


If the index manages to reverse its current losses, eyes seems likely to be on 5,600 again for potential resistance.


It’s important to note that volatility is still printing its lowest levels since September 2014 (based on a 20-day ATR study).


ASX 200 Daily Chart: August 29, 2016

ASX 200 Technical Analysis: Index Falling After 5,500 Break


--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com


To contact Oded Shimoni, e-mail oshimoni@dailyfx.com


Follow him on Twitter at @OdedShimoni


ASX 200 Technical Analysis: Index Falling After 5,500 Break
ASX 200 Technical Analysis: Index Falling After 5,500 Break
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Top development head says China needs urgent economic transformation

Official pushes for reforms


A top Chinese official committed a faux pas by criticizing the path of policies and the lack of action towards reform in the People's Daily today.



"If old ways continue, not only will investment rates continue to fall and debt continue to rise, but financial risks will also increase," Wang Yiming, deputy director of the Development Research Centre of the State Council wrote.



His position as the vice head of the cabinet think-tank may give him more leeway to push for reforms.



Meanwhile, Xinhua carries a report today saying China's cabinet has launched a nationwide inspection to make sure growth targets are being met. The effort will no doubt run into a multitude of lies and whitewashing.



Inspectors have been sent to the provinces, focusing on areas of maintaining steady economic growth, implementing major policy measures and "supply-side structural reforms", as well as supporting investment projects and innovations, Xinhua said.

Top development head says China needs urgent economic transformation
Top development head says China needs urgent economic transformation
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Iran and Iraq weigh on oil prices

WTI crude down 1.2% to start the week


The two main bits of weekend oil news:

  1. Iran said it would only cooperate in talks to freeze output if other exporters recognized its right to full regain market share

  2. Data showed Iraq producing 3.205 mbpd in Aug compared to 3.202 mbpd in July

There's also an element of unwind after talk of Yemen attacks on Saudi oil facilities on Friday were denied.


Iran and Iraq weigh on oil prices
Iran and Iraq weigh on oil prices
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HIA Australian new home sales -9.7% m/m vs +8.2% m/m prior

Australian new home sales from the Housing Industry Association


  • Prior was +8.2% m/m

The headline looks like a bit of a shock but it's a volatile indicator.



No reaction from AUD.

HIA Australian new home sales -9.7% m/m vs +8.2% m/m prior
HIA Australian new home sales -9.7% m/m vs +8.2% m/m prior
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The forex trading classics are back in style

The three classic forex trading strategies have been winners this year


The three traditional ways to trade currencies are:

  1. The carry trade

  2. Trend following

  3. Purchasing power parity/valuation



Bloomberg reports that all three are winners so far in 2016. If that continues through year-end it will be only the second time in the past decade that all three have worked.


They say the momentum trade has yielded 3% this year, the G10 carry trade has paid 5.8% and buying the undervalued Japanese yen has been the biggest winner.


The last time all three strategies worked in the same year was 2014. Prior to that they hadn't worked together since 2004.


I'm not sure how they have come up with some of these metrics but it's an interesting take.


[embedded content]

The forex trading classics are back in style
The forex trading classics are back in style
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Trade ideas to start the week: The yell and the echo

Yellen fallout will dominate the start of the new week



Hawkish comments from Yellen and dovish chatter from Kuroda is the dominant theme as a new week kicks off.


That hasn't translated into price action just yet with USD/JPY up only 13 pips to 101.96 but it's certainly the topic of conversation.


Where do you think USD/JPY will finish the week?


There is talk of option-related selling around 102.00 in the pair and the possibility of follow-up comments from the BOJ.


"There is no doubt that there is ample space for additional easing in each of the three dimensions," Kuroda said Saturday, referring to asset buying, monetary-base guidance, and negative rates.


I like further upside for USD/JPY from here but the 102.70 zone could prove to be challenging.



What other markets are you watching?

[embedded content]



Trade ideas to start the week: The yell and the echo
Trade ideas to start the week: The yell and the echo
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Goldman Sachs: Nothing will save copper

Goldman Sachs predicts a "supply storm" in copper



Copper prices declined last week and are now down 2.4% on the year.


Analysts at Goldman Sachs say that's just the start as stockpiles continue to mount and demand from China is slowing. They say copper is "entering the eye of the supply storm" with supply set to climb 15% in the coming quarters. Meanwhile, customs data shows that Chinese imports of refined copper shrank in July to the smallest in 17 months, while exports jumped five-fold from a year earlier.



What may cause an acceleration to the downside in copper is a rise in bearish bets among speculators. Bloomberg highlights how net positioning shifted to short last week.


In the bigger picture, copper is often seen as an economic barometer but given that the moves at the moment are being driven by supply, that's a dangerous assumption.

Goldman Sachs: Nothing will save copper
Goldman Sachs: Nothing will save copper
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Welcome to a new trading week: Early FX price indications

Opening moves in the forex market


Well it's a new trading week and the market is still trying to figure out exactly what Janet Yellen meant when she said the case for a rate hike had strengthened.



The US dollar finished the day strong on Friday and that momentum has continued into the weekly open.



The dollar is up around a dozen pips on most fronts.



Here is a look at how the open is shaping up:




Eamonn is on vacation today so I'll be rocking you through the Asia-Pacific session.

[embedded content]

Welcome to a new trading week: Early FX price indications
Welcome to a new trading week: Early FX price indications
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AP editor defends Clinton probe, admits 'sloppy' tweet

Associated Press editor: Clinton Foundation tweet was sloppy

Associated Press Executive Editor Kathleen Carroll is defending her organization's controversial investigation into meetings Hillary Clinton took while Secretary of State -- but she admits a tweet the AP sent out about its story was "sloppy."

"I do think it's interesting," Carroll said of the AP's investigation and its findings during an interview with Brian Stelter on CNN's "Reliable Sources" Sunday. "We didn't say it amounted to the end of the world, we said this is an important and interesting thing that people should know about, Clinton's tenure in the highest office that she's ever held, Secretary of State. Who did she meet with? Who are those people?"

The investigation, and an article the AP published about it, came under scrutiny this week.

Related: Associated Press botches Hillary Clinton report and response

In examining people Clinton had met with during her tenure at the State Department and how many of them had given to the Clinton Foundation, the AP had excluded those with whom Clinton would be expected to meet as Secretary of State -- U.S. government employees and officials from foreign countries, for example. Critics charged that this painted a misleading picture of how much priority Clinton gave to the foundation's donors.

That was especially true of a tweet the AP sent promoting its story, in which it did not disclose the meetings it had left out of its calculations.

"We're a lot better at breaking stories and covering news and gathering video and taking photographs than we are on tweets," Carroll told Stelter. "This one could have used some more precision."

However, asked if that meant she regretted the tweet, Carroll said, "No. If we felt it was wrong, we would have taken it down right away." Pressed again, she said, "I think it was sloppy."

Carroll did defend the story itself, though, and put some of the blame on the Clinton campaign and the State Department for not being more forthcoming with Clinton's schedule as Secretary of State and for not answering questions about the investigation's findings.

"We ask them questions, they are unresponsive," Carroll said. "They had been unresponsive from the State Department until we sued them to get the documents, so you know we're glad to have plenty of conversations with people about that."

She added: "Anything they want to say to us that we can include in the story that would help illuminate their point of view, we'd be glad to include."


AP editor defends Clinton probe, admits 'sloppy' tweet
AP editor defends Clinton probe, admits 'sloppy' tweet
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AP botches Hillary Clinton report and response

Hillary Clinton's explanations of her email saga

Hillary Clinton is surrounded by suggestions of controversy. Terms like "Clinton Foundation," "email server," and "Benghazi" hover around her like a faint smoke that hints at the existence of fire.

But finding the fire -- the lie, the misdeed, the unethical act -- is proving to be rather difficult, as evidenced this week by an inaccurate tweet and arguably misleading story from the Associated Press that were quickly rebutted by the Clinton campaign and dismissed by many media outlets.

Three days later, the Associated Press is still standing by its story and has yet to correct its tweet, despite near unanimous agreement among other journalists that the tweet, at least, was false.

"The AP's social-media take on the story was seriously flawed," David Boardman, the Dean of the School of Media and Communication at Temple University and former editor of the Seattle Times, told CNNMoney. "It's sloppy, click-grabbing shorthand that is a disservice to the reporting to which it refers."

On Tuesday, the AP sent out a breaking news alert: "BREAKING: AP analysis: More than half those who met Clinton as Cabinet secretary gave money to Clinton Foundation."

Not true: As the article stated, what the AP found was that "more than half the people outside the government" who met with Clinton while she was secretary of state "gave money — either personally or through companies or groups — to the Clinton Foundation."

This "extraordinary" finding, as the AP put it, was deemed less extraordinary by other journalists and pundits who noted that Clinton had held thousands of meetings with government employees, foreign representatives, civil leaders, journalists and others while Secretary of State that were not accounted for in the AP's report.

Moreover, the AP only analyzed 154 meetings, based on what has been made available by the State Department, and thus its review only accounts for a fraction of Clinton's meeting schedule during her tenure as secretary of state. (The AP's defenders correctly note that the wire service was only able to examine a limited dataset because of the State Department's intransigence regarding the release of further records, which the AP has been fighting hard to secure.)

Nevertheless, the AP's tweet allowed Donald Trump to stand on stage at a campaign rally and declare that "fifty percent of people who saw [Clinton] had to make a contribution to the Clinton Foundation."

Clinton campaign spokesperson Brian Fallon accused the AP of cherrypicking "a limited subset" of data to give "a distorted portrayal of how often she crossed paths with individuals connected to charitable donations to the Clinton Foundation." On Twitter, he hit the AP for failing to correct its breaking news alert, which he called "100 percent factually inaccurate."

In a statement, AP spokesperson Paul Colford said his organization had been "transparent in how it has reported this story," and that it would continue to examine Clinton's schedules as they became available.

"The Associated Press' reporting relied on publicly available data provided by the State Department about Hillary Clinton's meetings, phone calls and emails, cross-referenced against donor information provided by the Clinton Foundation and its related charities on its websites," Colford wrote.

Meanwhile, other news organizations pilloried the AP's report.

The Washington Post Fact-Checker wrote that there were "many more nuanced and important details in the story that are being misrepresented — by the AP's own promotional tweet, and by Trump."

Vox's Matthew Yglesias was more direct: "The AP's big exposé on Hillary meeting with Clinton Foundation donors is a mess," his headline read.

Boardman argued that the story itself "was not nearly so flawed as Yglesias and others have charged."

"The AP reporters made clear they found no smoking-gun quid pro quo. And Clinton defenders' claim that 'there is no story' is absurd; of course it is worth investigating and explaining the relationship between Secretary Clinton and the Foundation, and how that relationship worked while she was at State," he said.

"If anything," Boardman continued, "the AP story could have used far more exploration of the inherent ethical issues here, and of the notion that whether or not Clinton gave extraordinary help to Foundation donors, the potential for accusations of that was probably reason enough to avoid such meetings altogether."


AP botches Hillary Clinton report and response
AP botches Hillary Clinton report and response
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Heads up for a UK holiday tomorrow (Monday)

UK markets will be closed Monday 29th for the August Bank Holiday


Just a reminder that the UK will be closed for business tomorrow as we get set to extend this last week-end of Summer.


Forgive me for not getting up at 04.00 GMT as usual but I'm out now for duration to attend this great music festival on the South Coast.


I will however be popping my head round the door around 06.00 GMT to see what's going on and bring you whatever news/orders that I can.


Enjoy the rest of your week-end one and all.


Can't wait to see these guys later. If you're not already aware of them ( despite my best efforts here) then do yourself a real favour and check 'em out.


[embedded content]




Heads up for a UK holiday tomorrow (Monday)
Heads up for a UK holiday tomorrow (Monday)
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sabato 27 agosto 2016

UK's O'Donnell says handling Brexit will be an "unprecedented challenge"

Former head of the UK civil service Lord O'Donnell in The Times and on BBC radio 27 Aug 2016


  • handling Brexit would be an unprecedented challenge for UK govt and civil service

  • he wouldn't be in a rush to trigger Article 50

  • govt must first work out a strategic plan strategic plan to say "what kind of UK do we want, what's our place in the world, what are we trying to achieve in these negotiations'".

  • PM May faces a "really difficult job"

  • UK could remain in a "looser" EU

  • will take parliament years and years and years" to separate fully from Brussels

"It very much depends what happens to public opinion and whether the EU changes before then,"


He later told the BBC he did not think the EU would make the radical changes needed for the UK to remain a member.


"The probability of us not leaving is very, very low and we need to get on and implement the people's decision"


Lord O'Donnell is an economist who also served as press secretary under John Major, and then as cabinet secretary - the UK's most senior civil servant - in the govts of Tony Blair, Gordon Brown and David Cameron.


Conjecture and more conjecture over the timing of pushing the Article 50 button and the unknowns of the subsequent fallout for the UK, and indeed the EU.


This latest development is not a story to really impact on the pound in its own right but one gathering some column inches here at the moment.


                    Lord O'Donnell - Brexit is an unprecedented challenge


UK's O'Donnell says handling Brexit will be an "unprecedented challenge"
UK's O'Donnell says handling Brexit will be an "unprecedented challenge"
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venerdì 26 agosto 2016

Yellen Breathes Life Into the Dollar But A Trend Takes More Force

Yellen Breathes Life Into the Dollar But A Trend Takes More Force


Fundamental Forecast for Dollar: Bullish


  • Probabilities of a Fed rate hike in September rose to 42% with the Fed’s preferred PCE and NFPs ahead


  • The US Labor Day holiday on September 5th will work against speculative traction


  • See our 3Q forecasts for the US Dollar and market benchmarks on the DailyFX Trading Guides page


It has been months since the market has looked at the Dollar with as much interest as the currency was paid through the close of this past week. The Greenback rallied sharply through the close of this past week with significant help from Fed Chair Janet Yellen at the Jackson Hole Symposium. The single-day rally was the biggest since the safe haven’s surge in the wake of the Brexit vote, but there is perhaps deeper conviction in the ability of monetary policy as a catalyst over the consistently faltering risk aversion appeal for the currency. Is this a charge that will carry through the coming week via conviction and momentum? While possible, it will be a struggle to maintain.


Looking to the Dollar’s late-in-the-week move, we can trace the catalyst to both monetary policy and risk influences – though the latter is likely a limited reflection of the former. The spark was comments that came from the annual gathering hosted by the Kansas City Federal Reserve in Jackson Hole, Wyoming. The market was closely watching what Chairwoman Yellen would say on the economy and monetary policy moving forward. Her remarks were certainly optimistic. She stated that the economy was “nearing the Federal Reserve’s statutory goals” and that the outlook had improved. While that is far from a promise to hike on September 21st, it is materially more hawkish than the market had considered from the Fed.


Bolstering the hawkish view assessed after Yellen, other Board members and regional Fed presidents weighed in with a generally hawkish bias. Bullard remarked that a hike in September was a significant option, Lockhart said there was scope for two hikes in 2016 if the data supported it and Mester remarked that it was important not to fall behind the curve. The most tangible heft would come from Vice Chairman Stanley Fischer’s remarks though when in an interview he answered that Yellen’s speech left the door open to a September hike and two moves this year. Of course, potential is not intent. We have seen the Fed’s forecasts cut down many times before, and that engrained skepticism can easily snap back.


Heading into the new trading week, the market was pricing in a 42 percent probability of a hike next month and a 65 percent chance of a move sometimes this year. That is a significant pick up in hawkishness from recent weeks. Event risk this week can solidify this jump in expectations or it can quickly break it down. A range of Fed speeches and secondary economic readings is on tap. However, the updates with heft are those that reflect upon those ‘statutory goals’ Yellen referred to: the PCE deflator and NFPs. Employment conditions are close to target as-is (even if there are frequent debates as to quality in the metrics). It is inflation where the waters are still low. As the preferred price gauge for the Fed, a jump from the PCE could offer solidity to Dollar performance.


It will difficult to keep the market on pace for US hawkishness and thereby Dollar bullishness. First of all, it will be difficult to weave a fundamental path where the heat keeps rising for rate hike expectations. More systemically, the pull of complacency will be exceptionally strong on skepticism. While the week ahead is active for scheduled event risk, the backdrop for activity is stubbornly quiet. Add to that the anticipation of the Labor Day holiday the first Monday of September, and the perception of a seasonal inhibitor will readily open a crack in any conviction that attempts run more significant resistance for the Dollar.


Yellen Breathes Life Into the Dollar But A Trend Takes More Force
Yellen Breathes Life Into the Dollar But A Trend Takes More Force
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Australian Dollar May Fall Further on Fed vs. RBA Policy Bets

Australian Dollar May Fall Further on Fed vs. RBA Policy Bets


Fundamental Forecast for the Australian Dollar: Bearish


  • Australian Dollar sinks as Fed’s Yellen boosts rate hike bets


  • US payrolls data may continue to encourage Aussie weakness


  • Domestic news-flow may add fuel to RBA easing speculation


What do retail investors’ AUD/USD trade decisions say about the price trend? Find out here.


The Australian Dollar continued to trade lower last week as hawkish commentary from Federal Reserve Chair Janet Yellen fueled near-term rate hike speculation, weighing on the yield-sensitive currency (as expected). The central bank chief said “the case for an increase in the federal funds rate has strengthened in recent months”, pushing the priced-in likelihood of tightening by year-end to nearly 65 percent and sending the Aussie to a monthly low against its US counterpart.


Looking ahead, Yellen’s confidence will be tested as Augusts’ US Employment figures cross the wires. An increase of 180k in nonfarm payrolls is expected, which would fall closely in line with the average pace of 190k that the Fed Chair approvingly cited in her speech. That suggests a print in line with expectations will probably prove relatively innocuous despite marking a slowdown from the prior month but also do little to further the rate hike narrative. Employment figures have veered north of consensus forecasts in recent months however. More of the same this time around may give rate hike bets a further boost, pressuring the Aussie lower.


On the domestic front, a steady stream of activity data will feed speculation about the RBA’s policy trajectory. Building Permits, Retail Sales and capex numbers are all due to cross the wires. Australian economic news-flow has weakened relative to economists’ expectations over recent weeks and the year-end monetary policy outlook implied in futures prices has steadily eroded despite central bank officials’ downplaying of near-term stimulus expansion prospects. Another soft round of data outcomes may encourage the markets’ dovish disposition, compounding downward-pulling external forces and deepening the selloff.


Australian Dollar May Fall Further on Fed vs. RBA Policy Bets
Australian Dollar May Fall Further on Fed vs. RBA Policy Bets
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