Firmer greenback dominates FX

The greenback rallied, helped by strong housing data as housing starts posted the best figure since November 2007.

greenback
Source: Bloomberg

AUD/USD was one of the worst hit as greenback strength weighed on the pair. Additionally, renewed iron ore weakness added to the pressure, with the commodity dropping ore back below $60/t ($58.63/t). This move in the AUD would appease the RBA as jawboning seems to have run its course.

On the calendar today we had Westpac consumer sentiment, which showed some optimism and this is evidence that the rate cut cycle is having an effect on consumers. This reading could even pick up further in months to come as the impact of the budget gives a tailwind. Data is limited on the AUD side for the rest of the week and moves are likely to be driven by USD volatility.

Later today we have FOMC minutes and that’ll be the key release for FX markets. A short-term uptrend on AUD/USD has also been broken now but we might see some support in the $0.7900 region, which is a fairly significant congestion zone.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.