The USD has yet again regained its upward trajectory despite poor jobs data in the form of worse than expected NFP figures on Friday, the figure printed 156k vs the expected 175k, indicating that the number of employed people fell short of expectations. However, the news was quickly dismissed as we saw a host of FOMC members, who are responsible for gauging the current and future outlook of the US economy and to subsequently vote on whether to increase, decrease or leave rates unchanged in attempts to guide the USD economy to prosperity. An overwhelming majority of the members struck a hawkish tone where they saw at minimum two rate hikes but on average 3 rate hikes for 2017. They stated that growth was strong and that the previous measure to stimulate growth had been successful but that the FED has to get ahead of a possible run away in inflation. This has resulted in a bump up in USD strength as we see gold slide as markets prepare for the higher interest rates which will affect flows to the USD as investors hunt the higher yield. The trend is expected to continue provided that the FOMC members remain hawkish and that news out of the USA remains positive and accommodative of further rate hikes. Should the US economy take a turn for the worse, we will see a strong sell off in the USD as investors unwind their positions respectively.
Today’s key data comes in the form of the Australian Retail Sales m/m, expected at 0.4%, indicating that consumers have hit the stores purchasing 0.4% more than the previous month. With the AUDUSD stable at 0.7325, tonight’s news will likely be a catalyst to further swings in the AUD with better than expected news, likely to see the AUD strengthen while worse than expected news will see the AUD being sold off. China also takes the forefront as the giant releases its CPI y/y and PPI y/y data, expected at 2.2% and 4.6% respectively. Better than expected data will result in a strengthening of currencies in the area as they are buoyed by favorable conditions led by the major economy. However, worse than expected results will indicate that the giant still has several limiting factors pulling it down which will see currencies in the area dragged lower.