Broad USD Strength was seen Friday as Inflation ticked higher and chances of a hawkish FED at the coming meeting on Wednesday increased. Whilst the market is only pricing in a 20% chance of a hike at September’s meeting there is a strong chance of Yellen talking up the need for the US central bank to raise rates soon and this may lead to USD strength as chances of a December rate hike firm.
The AUD/USD slipped below 0.7500 to 0.7480 but with stocks calmer and the global bond market selloff slowing we didn’t see much follow through and we have opened higher in Asia today just below the 0.7500 figure.
A big week in the markets is ahead of us with the BOJ on Wednesday afternoon before the FED on Wednesday night and then the RBNZ on Thursday morning. AUD/NZD has been grinding lower for the last few weeks as the NZD has outperformed but a dovish RBNZ may see the opportunity for the pair to rebound as the 2.0% interest rates in New Zealand are forecast to drop to 1.5% the same as Australia in the coming 6 months.
