Forex Today - USD on the march again

Welcome to my Forex Today column where I'll give a brief wrap on the key drivers of Forex markets and throw in a chart of the day. 

As ever, feedback welcome....oh and for AUDUSD specifically you can find that in My Australia Today piece each morning on the blog. 

And, for a deeper dive into more currencies and the charts please see my daily markets video.

QUICK SUMMARY

The Fed appears to be doubling down on its intention to continue to raise rates regardless of what President Trump might say. That's not unexpected, but overnight Kansas City Fed president  Esther George joined her colleague from Dallas in saying the Fed is likely to continue to raise rates. 

That's helped the USD even before we hear from Jerome Powell at Jackson Hole this evening. 

So the USD is on the march once more with the Aussie dollar getting doubly belted by political shenanigans and falling to 0.7250. That 1.3% fall was even worse than the Pounds Brexit worries fall of 0.75% which sees it at 1.2813 and much worse than the Euro’s 0.5% fall to 1.1542, or the Yen’s 0.6% loss with USDJPY up at 111.29. 

The Kiwi got belted as well last night losing 0.9% with NZDUSD at 0.6635 while the CAD lost 0.62% with USDCAD at 1.3081. But it’s politics in Australia and the Aussie dollar which are the big losers.

That said though there was a little kerfuffle in EM forex as well with USDMXN up 1.2%, USDBRL up 1.86%, and USDZAR up 1.6%. The Turkish lira lost about 1.15%. Watch this space folks.

BIGGER PICTURE

The USD is in the ascendancy again this morning.

It cant be because of the data because while the EU flash PMI came in around expectations – though manufacturing in Germany was down and had to be counter balanced by services – the US flash PMI’s were lower than expectations in Manufacturing, Services, and composite terms.

Indeed the Citibank economic surprise index has fallen further for the US to -20.2 while the EU score has climbed back to -5.6.

So, it’s not the data. And Jens Weidmann’s comments about the ECB withdrawing stimulus are supportive of the Euro. But the EU govie 2year forward 2 year rate I highlighted yesterday is al ittle tiny bit lower which seems to map with the Euro’s move.

Equally though perhaps with the Fed doubling down that it will do what it needs to do and with US jobless claims again strong last night traders know US rates are rising well before anyone elses.   And for those who worry about the curve at 20 points of flatness between 2’s and 10’s I’ll counter with this chart from Jereon Blokland on Twitter. It’s also a recession indicator. And until we start to see a drift higher in jobless claims we probably don’t have to worry to much about the recession.

Click on me, I'll expand
Click on me, I'll expand

Looking at the Euro though, yesterday I suggested a pullback toward 1.1499. SO it could all just be a technical move.

Click on me, I'll expand
Click on me, I'll expand

I'll discuss all the majors I follow in my video which will be out a little later this morning.

DATA:

On the day it’s Kiwi trade, Japanese inflation, and Singaporean industrial production in out time zone. And the LibSpill political mess of course here in Australia. Tonight it’s Fed chair Powell at Jackson Hole as well as German GDP and US Durable goods.

Have a great day's trading.

Greg McKenna

Chief Market Strategist

gregmckenna.com.au

The information provided here has been produced by third parties and does not reflect the opinion of AxiTrader. AxiTrader has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted

Other articles you might like


Forex Today - Euro fails are resistance as Draghi and data weigh

Still range trading - will GDP see a break out at week's end?

Forex Today - USD on the march again

If Euro can hold 1.15 it's rally may not be over. Otherwise...

Forex Today - The majors have mostly filled this morning's Turkish Lira induced gap lower

Funk gap filled - now back to the reality of a structurally stronger USD.

Forex Today - The USD is under pressure again, will the ECB break it wide open?

The next 48 hours are telling for forex markets - volatility could increase materially.