FX market outlook

FX market outlook

Posted on Tuesday, June 20 2017 at 8:08 am GMT+0000

Dollar firms on hawkish Fed speakers; sterling in focus ahead of speeches by BoE Governor and UK Chancellor.

The US dollar was firmer on the back of hawkish comments from Federal Reserve officials. Sterling held onto Monday’s losses as all eyes turn to the mansion House speeches later by Bank of England Governor Mark Carney’s speech and UK Chancellor Philip Hammond. The aussie rose despite mixed RBA minutes.

The greenback rose to a 3-week high against the yen at 111.76 as higher US Treasury yields helped lift the US currency. Comments from New York Fed President William Dudley and Chicago Fed President Charles Evans on Monday suggested the US central bank will continue on its rate hike path. Vice-Chair Stanley Fischer speaks later today.

The aussie rebounded after Australia’s central bank released minutes of its latest policy meeting. The minutes showed the RBA remains concerned about high household debt and its threat to financial stability but despite this, the central bank gave a relatively upbeat assessment of the economy, suggesting to markets that it will not cut rates in the near future.  This helped the Australian dollar rebound to eventually rise above the key $0.7600 level by late session trading.

The pound will be in focus today as the UK’s finance minister and Bank of England governor are due to speak later at Mansion House. Any hint by Governor Carney that suggests he sees no rush to raise interest rates would be negative for the pound. Meanwhile, markets are eager to see what Philip Hammond will say regarding Brexit. Cable touched a session low of $1.2722 before rising towards $1.2750.

The euro traded near lows of $1.1140, close to 2-week low of $1.1131 touched on June 15.

In commodities, gold fell to $1242.76 an ounce, its lowest in a month, while WTI crude oil continued to trade below the key $45 a barrel level.