- 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.