The tapering debate swung again last night with a balanced Fed Chair nominee Yellen helping stoke bets as she put the focus back on economic data. The move to the greenback however had started much earlier with the majority of the gains taking place through the start of the European session suggesting that her initial comments were overplayed yesterday morning. The Aussie traded back from its high this time yesterday of 93.86 US cents, to a low of 92.92 before it was able to find a bit more support through the US session as Yellen spoke. The Euro also followed a similar trade trajectory, although it sits much close to yesterday’s high now at 1.3456 USD.
The US dollar was able to break through the 100 Yen mark and remain above with yesterday’s Japanese GDP which fell quarter on quarter helping increase bets that the BOJ will have to increase its stimulus sooner than thought. The surprise performance overnight was the Pound which continued to surge and was as high as 1.61 USD even after earlier retails sales had contracted 0.7%. The outlook for the UK economy was the driver for the trade support with it expected now to outperform major economies in the near term.
Only minutes ago Moody’s downgraded ratings of Goldman Sachs, Morgan Stanley, JPMorgan, and BNY Mellon which has seen an initial drop of the Aussie of about 10 pips to 93.13 US cents and likely to help the market to a bearish risk sentiment to end the week. There is little in the way of data to finish the week so this move is likely to be dwelled on to the close of trade tomorrow morning.
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
