Larry Summer’s withdrawal from the next Fed chairman role, Syrian concerns abating and a lack of fear over a possible small 10 billion cut to fed tapering have seen risk assets start this week with a bang. Global markets have responded quite positivity to Yellen’s likely continuation of the Fed’s current policy spec. The Australian dollar charged over a cent higher than its close on Friday hitting a high of 93.7 US cents briefly before easing back to 93.31 US cents as we wait for the local equity market to open. The gap over the weekend was concurrent across the majors with the US dollar losing ground of about 50- 60 pips from Friday to the open versus the Euro, Pound, Yen, Loonie and Kiwi Dollars.
The Trading week will likely be wholly focused on the FOMC meeting on Wednesday/Thursday this week. Once the Fed get the read on CPI data a day earlier it level will likely clear the way for a drop in QE from $85 billion to $75billion monthly total which is widely expected by the majority of economists.
A lack local of data from Australia coupled with a bank holiday in Japan today will likely take a bit of the volatility out of the rest of our session today, with the fireworks really taking place in the first 45 minutes of trade today. The Euro will be closely watched later today with ECB President Draghi speaking and European CPI data out following at an expected gain of 1.3% year on year.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
