Forex Forecast

AUD Slips Further The Australian dollar remains in focus for FX investors, with a further drop in iron ore prices putting the currency under renewed pressure.

BoC Meeting Today Spanish bonds rallied for a second consecutive day after Draghi’s comments that the ECB could buy sovereign bonds with maturities of up to three years.

ISM Due FX markets were confined to fairly narrow ranges in Tuesday’s European session. Periphery fixed income markets were generally well supported, following yesterday’s (indirect) comments from Mario Draghi.

RBA Stays On Hold Risk was somewhat better behaved overnight as the RBA decision suggested there was no need to hit the panic button yet. However, stocks are mixed across Asia in anticipation of more turbulent waters to come.

Draghi Boosts Euro Investors remain intensely focused on what form the ECB’s new bond-buying program will take. Despite the US holiday, EURUSD suddenly jumped 60 pips overnight when ECB President Draghi claimed that the purchase of “bonds with a maturity of up to three years would not be state financing”.

AUD Slips Some More The much-anticipated Jackson Hole speech was dovish as expected, but did not deliver clarity on the timing of any future round of easing.

More To Digest The much-anticipated Jackson Speech did not deliver the confirmation for further QE that markets had sought. Nevertheless, after the initial disappointment, which helped the dollar recover, investors largely decided that the FOMC indeed edged closer to additional easing via conventional asset purchases.

Brace Yourselves Risk assets traded on a firm tone ahead of Bernanke’s keynote speech at the Jackson hole. An article in the Financial Times suggesting that the ECB may be granted greater authority over Eurozone banks under a new European Commission plan provided some support, though we believe that a large degree of the rally […]

Bernanke Takes Centre-Stage Fears over fresh commodity price declines continue to hang over the Australian dollar, but AUDUSD managed to consolidate overnight despite yet another batch of negative media coverage.

Bracing For Bernanke Equity market weakness translated into a firmer JPY in the G10 space, though conviction was predictably lacking given the proximity of Bernanke’s Jackson Hole speech.

US Data Eyed As expected an Italian auction bond was very strong, with overbidding particularly evident in the 10y. This is largely a function of the back-end of the curve lagging the recent rally in the front end, but the strong performance will encourage investors ahead of the upcoming ECB meeting.