Firmer greenback dominates FX

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

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.

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