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FXstreet.com (London) - The “will they, wont they?” of Fed policy expectations continued yesterday with Bullard and Lacker muddying the waters still further with contrasting stances on the timeframe for a tapering of the Fed’s USD85bn-a-month asset purchase programme. However, the dollar remains broadly bullish on momentum from the October Fed minutes.

Over the Asian session, the US dollar rally continued with USD/JPY holding above JPY101 on diverging monetary policy expectations. The pair rallied strongly through yesterday after the Bank of Japan followed the Fed’s surprisingly hawkish October meeting minutes with the decision to remain firmly committed to its current aggressively loose monetary policies.

Yen weakness was driven further by Bank of Japan Governor Haruhiko Kuroda saying he will do whatever necessary to restrict a rise in long-dated bond yields.

USD/JPY is at JPY101.0650, down from highs at JPY101.3600.

Commodity currencies across the board have been put under pressure thanks to the relatively hawkish Fed minutes earlier this week, but the Aussie dollar was put under further pressure by Reserve Bank of Australia chairman Glenn Stevens sating that he would be prepared to intervene in the Aussie as long as intervention is “judiciously used in the right circumstances.”

AUD/USD is down 0.33 percent to USD0.9200, recovering from a low of USD0.9168.

In Europe, while Eurozone PMIs generally under-performed yesterday, Germany performed strongly. As a result, we may see today’s German IFO numbers surprise to the upside.

There is little in the way of data releases in the US. In Canada, October CPI and September retail sales figures are to be released. The bigger focus will be on the CPI numbers given Canada’s concerns over weak inflation.
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