The Australian Dollar rose to high of 0.7446 before European sellers controlled the price to 0.7420 at the NY opening. With Trump as the catalyst Aussie fell to 0.7373 before levelling off in a 0.7380 corridor. With emerging market risk unsettled by overnight events it’s unlikely we’ll see a recovery throughout early Asia.
Novembers Federal reserve minutes released this morning show the December rate hike as a forgone conclusion and that focus is now points towards the number of raises in 2017. Market trajectory has changed significantly since the meeting a week before the election but fed voters widely agree the case for a rate hike has continued to strengthen as Trump promises fiscal stimulus.
USD strength was unanimous last night as the US dollar Index reached multi year highs driven by US yields and the compound of the thanksgiving public holiday. Moves came shortly before the durable goods report taking USD/JPY from 111.00 at NY opening to 112.97 with the pair settling near 112.50. In similar, but slightly less spectacular fashion, EUR/USD dropped 70 pips when US trading kicked in finishing at 1.0553. XAU buckled surrendering the $1200 mark in spectacular fashion to settle in a $1188 channel.
UK chancellor Phillip Hammond delivered his first budget yesterday mapping three fiscal targets of, reduce borrowing to below 2% of GDP by 2020; deliver a surplus in the next parliament; and have a falling debt/GDP by the conclusion of this parliament. A clear ambition to end austerity and reduce public debt saw little reaction from markets with slight gain vs Euro, and in cycle with the rest of the market, a drop vs USD.
