MARKET DEVELOPMENT –AUD/USD[1] Drops as Rate Cut Bets Soar, USD[2] Reverses Fed Induced Gains
DailyFX 2019 FX Trading Forecasts [3]
JPY[4] / CHF[5]: Safe-haven currencies slightly firmer throughout the European session following the BoJ’s and SNB’s decision keep rates on hold. Alongside this, the SNB refrained from downgrading its rhetoric on the Swiss Franc, stating that it remains highly valued as opposed to significantly overvalued, despite the fact that CHF had recently been trading at a 2yr high vs EUR[6], which had prompted a step up in FX intervention.
AUD[7]: Overnight, the Australian Dollar came under selling pressure, underperforming against its major counterparts following the latest Australian jobs market report. While employment change rose, this had largely been attriubuted by part-time jobs, while full-time positions had contracted. Consequently, the underployment rate rose 0.2ppts to 8.6%, while the umployment rate also edged higher, providing concerns for wage growth going forward, despite the fact that the RBA have cut rates twice. In turn, this has boosted RBA rate cut expectations, which has sharply risen to 80% from 25% at the beginning of the week, as such, this makes October a live meeting. That said, AUD watchers will be paying close attention to Governor Lowe’s speech on September 24th.
USD: The hawkish dissappointment from the Federal Reserve had been short-lived with the US Dollar[8] paring much of its Fed induced gains, while gold prices[9] regained the $1500 level. Going forward, eyes will be on the US-China trade war developments with reports in SCMP suggesting that Beijing experts see an interim trade deal being reached.
