All trading involves risk. Losses can exceed deposits.

Greenback roars back

Price action in the FX space has been choppy this week as investors looked for direction by juggling the FOMC meeting minutes and Fedspeak.

All trading involves risk. Losses can exceed deposits.
Greenback
Source: Bloomberg

The US dollar recovered some ground after comments from Fed vice-chair Stanley Fischer, James Bullard and Lacker were skewed to the hawkish side. Additionally, unemployment claims fell and came in better than expected, helping fuel the USD hawks.

Bullard feels the Fed should begin tightening in late Q1, while Fed vice-chair Stanley Fischer said he expects lift-off around the middle of next year. The exact timing will be data-dependant. There will be more Fedspeak later today, with Plosser, Fisher, George and Lacker on the wires. There is room for more USD volatility as a result.

Risk-off hurts the AUD

With markets mostly risk-off and with the USD strengthening, AUD/USD reversed after having traded as high as $0.8900. This was fairly swift and saw AUD/USD drop back below $0.8800.

A sharp drop off in home loans data didn’t help the situation after the RBA’s recent efforts to rattle property investors. Choppy price action is likely to continue as we head into the weekend. Volatility for the pair will probably come from the USD side.

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.

Find articles by analysts