Last week saw the USD sore despite less than upbeat data out of the region. The initial weakness in the USD was overturned by bullish rhetoric form several FOMC members, who all managed to strike a relatively bullish tone, talking up the case of a rate hike later this month. The USD responded appropriately and soared against all its counterparts, most notably against commodity currencies which currently enjoy a relatively high swap advantage over the USD, prompting selling against the dollar as market priced in a decrease in the interests differentials an thus the value of a carry trade. Commodities took a dip on the bullish resurgence of the USD, with gold and silver crossing down sharply towards the end of the week. Equities were also slammed as we saw US indexes dropping rapidly as market fear of a rate hike and its tightening effect on monetary policy which would see aggressive selling in equities.

Going forward, any signs of bullishness for the US which may be construed as a cause for a rate hike will see the USD well supported as it makes higher highs while dovish comments will see the USD quickly give back last week s gains as the game of chicken between the bulls and bears continues.

Today’s key economic data is a follows:


  • FOMC Member Brainard Speaks


  • RBA Assist Gov Kent Speaks
  • NAB Business Confidence previously at 4


  • Industrial Production expected at 6.2%
  • Fixed Asset Investment ytd/y expected at 7.9%