Forex Flash: USD needs risk averse impetus to net gains – Westpac
FXstreet.com (Barcelona) - Friday's US December employment report wasn't a game changer for markets, but did provide a reminder of the ongoing struggles of the US dollar. The 155K gain in jobs, combined with upward revisions, was only modestly above consensus but a good outcome given the weakness in business and consumer confidence as "fiscal cliff" talks dragged on acrimoniously.
US equities rallied in response, however the USD weakened - the AUDUSD, NZDUSD and EURUSD bouncing sharply after the data and then extending gains. According to Strategist Sean Callow at Westpac, "This strongly suggests that the US dollar needs a bout of risk aversion to make substantial gains right now, with the markets not taking too seriously the FOMC minutes last week which revealed that even as they ramped up QE, Fed members talked about completing this round of money printing before end-2013." Markets look to be assuming - probably correctly - that the Fed won't actually turn off the QE taps any time soon.
US equities rallied in response, however the USD weakened - the AUDUSD, NZDUSD and EURUSD bouncing sharply after the data and then extending gains. According to Strategist Sean Callow at Westpac, "This strongly suggests that the US dollar needs a bout of risk aversion to make substantial gains right now, with the markets not taking too seriously the FOMC minutes last week which revealed that even as they ramped up QE, Fed members talked about completing this round of money printing before end-2013." Markets look to be assuming - probably correctly - that the Fed won't actually turn off the QE taps any time soon.
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