After waning to 0.7635, AUDUSD rebounded sharply to test 0.7750, the high from last week. This bullish move can be attributed to aggressive USD sell-off and surge oil price. The greenback recorded a six-week low at 94.35 on the Dollar Index due to the fading expectation of a Fed rate-hike in 2016. Oil, on the other hand, extends the recent two-week rebound and recovery, breaking out above the short-term downtrend in place for more than two months. It is driven by the speculation that oil producer would cooperate to freeze the production, especially after Russian officials open the door for working with OPEC.
However, around 12:00GMT, the Fed’s Dudley commented the US economy is edging close to a rate hike and it is likely to take place in September. Lockhart, a voting member on the FOMC, also warned that the market is underpricing the tightening. After the statement, the Dollar Index bounced 40 pips, driving AUDUSD slumped to 0.7672.
US CPI report was slightly weaker than expected, indicating a gradual recovery in inflation. Owing to the weakness in oil price in July and gentle food price, CPI rise 0.0% m/m, the largest slowdown of increase since February. This report slightly cooled down the market sentiment with the Aussie ranging around 0.77 in the late US trade session. Market awaits Fed minutes for July FOMC meeting released late today to guide the future direction of the greenback and major currencies.
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