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.
James Bullard said he sees the first Fed tightening at the end of Q1 and a drop of the ‘considerable time’ reference at the October meeting. Kocherlakota also spoke and raised concerns about raising rates prematurely due to his forecast that inflation may remain below 2% for four years. However, his opinion seems a bit dated and out of tune with the recent dot plot analysis. All these developments saw the greenback continue to march higher against most of the majors.
Bears eyeing a test of $0.8800
Yesterday I highlighted selling AUD/USD near-term rallies into the $0.8930 region as my preferred strategy. This trade came to fruition as the AUD enjoyed a minor pop higher on the back of the positive China PMI print. Today we have the RBA’s financial stability review, but this has more to do with risks to financial stability than policy. Comments on the housing market will be of interest after recent calls of a bubble. As a result, I feel focus will be more on how commodities perform through Asia. I still feel $0.8800 could be tested in the near term.