FX market outlook

FX market outlook

Aussie and kiwi bounce on broadly weaker greenback.

The broadly weaker US dollar led to a bounce in the euro and sterling today. The Australian and New Zealand dollars also benefitted, as profit-taking on the greenback fueled demand for these higher yielding currencies. Meanwhile, Asian stock markets followed yesterday’s advances in US and European stock markets.

A light economic calendar and slow pre-Christmas trading translated into a relatively quiet Asian session.

The US dollar index, which measures the dollar against six major currencies, was down from yesterday’s fresh 14-year high of 103.65 to slip to as low as 103.06 in Asia today.

The New Zealand dollar has made a strong recover from 6-month lows touched yesterday. The pair climbed to $0.6946 in today’s Asian session after bouncing from yesterday’s low of $0.6881.

The Australian dollar edged up to a session high of $0.7272 after touching its lowest since June 2016 yesterday at $0.7222.

The yen got some reprieve today after weakening sharply since Monday. The dollar slipped below the key 118-yen level to 117.39 in Asian trading.

The euro was firmer against the dollar to hit a session high of $1.0418 to recover some losses after touching a 14-year low yesterday at $1.0351.

WTI oil rose for a fourth day to consolidate yesterday’s gains near $53.70 a barrel. Focus will be on US crude oil inventory data due out later in the day. The numbers are expected to show a drawdown in inventories.

Gold climbed to $1,137 an ounce as the US dollar weakened slightly today. But the precious metal has come under pressure recently to fall to 10-1/2-month lows of $1,122.66 last week.

Looking ahead to the rest of the day, Eurozone consumer confidence data and US existing home sales figures will be in focus.