US Dollar May Rise As Hawkish Fed Comments Boosts Rate Hike Bets
The New Zealand Dollar underperformed in overnight trade. The move tracked a decline in benchmark US Treasury bond futures, hinting that resurfacing Fed rate hike speculation may be applying outsized pressure to the yield-sensitive currency. Indeed, the Kiwi offers the highest carry in the G10 FX space, linking its fortunes in a significant way to relative rate spreads.The Canadian Dollar (another relative high-yielder) and the Japanese Yen (a rates-sensitive unit from the other end of the spectrum) followed the Kiwi lower.
Rising US yields may reflect follow-on momentum from supportive economic data as well as pre-positioning for a busy round of Fed-speak. Markit PMI data showed stronger service-sector growth than economists projected while consumer confidence unexpectedly jumped to the highest since 2007. Remarks from Chair Yellen and four regional branch Presidents (Bullard, Evans, Mester and George) are now on tap.A hawkish tone echoing Yellen’s near-promise of a December rate hike may boost the US Dollar.
The British Pound declined as BOE Deputy Governor Shafik said Brexit is a sizable shock for the UK economy and predicted that more easing will likely be needed. Perhaps most worryingly, she added that the central bank is uncertain about the economic impact and the side-effects of QE, echoing recent concerns about policymakers’ competence amid ever-more unconventional policy (especially in Japan).
Asia Session
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
01:45 |
CNY |
Westpac-MNI Consumer Sentiment (SEP) |
115.2 |
- |
111.5 |
05:00 |
Small Business Confidence (SEP) |
47.7 |
46.9 |
46.3 |
European Session
GMT |
CCY |
EVENT |
EXP/ACT |
PREV |
IMPACT |
|
06:00 |
German GfK Consumer Confidence (OCT) |
10.0 (A) |
10.2 |
Low |
||
06:00 |
UBS Consumption Indicator (AUG) |
1.53 (A) |
1.45 |
Low |
||
06:30 |
EUR |
ECB's Hansson Speaks Eurozone Outlook |
- |
- |
Low |
|
08:05 |
BOE’s Shafik Speaks at Bloomberg Conf. |
- |
- |
Low |
||
09:00 |
EUR |
ECB’s Draghi Addresses Research Conf. |
- |
- |
Medium |
|
13:30 |
EUR |
ECB’s Draghi Speaks in Berlin |
- |
- |
Medium |
|
13:50 |
GBP |
BOE Bond-Buying Operation Results |
- |
- |
Medium |
|
15:30 |
EUR |
ECB’s Villeroy Speaks in Brussels |
- |
- |
Low |
Critical Levels
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
1.1086 |
1.1154 |
1.1184 |
1.1222 |
1.1252 |
1.129 |
1.1358 |
|
1.2817 |
1.2906 |
1.2965 |
1.2995 |
1.3054 |
1.3084 |
1.3173 |
What are the more