Nomination reports weigh on the greenback

There was a lacklustre performance in the FX space with no fresh developments out of the US government shutdown negotiations.

- Euro creeps back above 1.36 against greenback

- AUD/USD range holds

- Cable still trending higher

However, it has been a lively start to Asian trade as reports that US President Barack Obama is set to announce Janet Yellen’s nomination as Fed chief as early as tomorrow resulted in some moves in risk currencies. Yellen is ideal for US dollar bears as her policies are strongly aligned to Ben Bernanke’s and therefore this implies we can expect her to push on with current policies.

Yellen is currently vice chair of the Fed and perhaps this piece of news might distract risk sellers from the fiscal situation momentarily. These reports are also quite timely considering the FOMC meeting minutes from the last Fed meeting are set to be released. These minutes are from the meeting which produced the surprise decision not to taper and the market will be looking for more clarity on tapering and forward guidance. Fed member Charles Evans will also be on the wires and pressure will be mounting for him to comment on the Yellen situation. As a result, the next 24 hours will be crucial for the USD and is likely to set the tone for the FX space.

Euro creeps back above 1.36 against greenback

EUR/USD is leading the gain in Asia and has crept above $1.36 on the Yellen speculation. The pair printed a high of $1.3607 overnight and is just retesting those highs at the moment. The single currency has been sidelined for a while and now looks like it is starting to move heading to the business end of the week. Later today we have German industrial production but this will just be a curtain raiser to ECB President Mario Draghi’s speech in which he might comment on his recent change in tone around further easing.

AUD/USD range holds

AUD/USD continues to hold in its new trading range which we have been talking about all week between 0.93-0.95. Downside to negative local economic releases has been limited with this morning’s Westpac consumer sentiment not quite showing the positive momentum we saw in the ANZ job ads and NAB business confidence readings. The pair is currently hanging at around 0.945 and is not too far off yesterday’s highs of 0.949. Of course tomorrow’s jobs data has been pinned as the most important release of the week for the local currency but we remain of the opinion that this range will hold.

Cable still trending higher

GBP/USD has continued its advance after bouncing off the uptrend support at 1.60. The pair is now back above 1.61 with some key data due out of the UK over the next couple of days. Later today we have manufacturing production, trade balance, industrial production and a BoE credit conditions survey due out. Then tomorrow we’ll have the BoE on the wires and we are bound to see some volatility as a result. We continue to favour longs on cable with potential entries on a pullback to the uptrend support.

Cable uptrend still intactCable uptrend still intact

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.