US Dollar on the Upswing as Markets Eye Fed Meeting Minutes

2016-08-17 06:39:00

Talking Points:

US Dollar gains on pre-position for hawkish FOMC meeting minutes
Yen drops as Asian stocks rise, Aussie and NZ Dollars under pressure
British Pound may not see lasting response to UK jobless claims data

The US Dollar outperformed in overnight trade as the markets’ attention turned to the upcoming release of minutes from July’s Federal Reserve monetary policy meeting. The currency rose alongside benchmark 10-year Treasury bond yields, suggesting investors may have been positioning for a hawkish posture.

Yesterday’s comments from Bill Dudley may have set the tone for pre-positioning. The New York Fed President said that the market is “complacent” about the need to hike rates and “under-pricing” the scope of on-coming tightening.

The central bank asserted that “near-term risks to the economic outlook have diminished” following the sit-down. Traders will be keen to see more about what lurks behind this assessment to gauge whether priced-in rate hike probabilities are indeed too low, as Mr Dudley argued.

The Japanese Yen slumped as Asian stocks pushed upward, sapping demand for the anti-risk currency. The Australian and New Zealand Dollars turned lower. A discrete catalyst was not readily apparent but the prospect of a more hawkish Fed may have applied outsized pressure on yield-sensitive high beta FX.

UK jobless claims headline the economic data docket in European hours, with a 9k increase expected. On balance, the release may have little lasting impact on the British Pound considering its limited implications for near-term BOE policy, with officials likely in wait-and-see mode having just expanded stimulus.

Has the US Dollar matched DailyFX analysts’ forecasts for 2Q? Find out here !

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	PPI Input (QoQ) (2Q)	0.9%	-	-1.0%
22:45	NZD	PPI Output (QoQ) (2Q)	0.2%	-	-0.2%
22:45	NZD	Unemployment Rate (2Q)	5.1%	5.3%	5.2%
22:45	NZD	Employment Change (QoQ) (2Q)	2.4%	0.6%	1.3%
22:45	NZD	Employment Change YoY (2Q)	4.5%	2.3%	2.0%
22:45	NZD	Participation Rate (2Q)	69.7%	68.8%	69.0%
00:30	AUD	Westpac Leading Index (MoM) (JUL)	0.05%	-	-0.22%
01:30	AUD	Wage Price Index (QoQ) (2Q)	0.5%	0.5%	0.5%
01:30	AUD	Wage Price Index (YoY) (2Q)	2.1	2.0%	2.1%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
08:30	GBP	Claimant Count Rate (JUL)	2.2%	2.2%	Medium
08:30	GBP	Jobless Claims Change (JUL)	9.0k	0.4k	Medium
08:30	GBP	Average Weekly Earnings (3M/YoY) (JUN)	2.4%	2.3%	Low
08:30	GBP	Weekly Earnings ex Bonus (3M/YoY) (JUN)	2.3%	2.2%	Low
08:30	GBP	ILO Unemployment Rate (3Mths) (JUN)	4.9%	4.9%	Medium
08:30	GBP	Employment Change (3M/3M) (JUN)	150k	176k	Low
09:00	CHF	Credit Suisse ZEW Survey (Expectations) (AUG)	-	5.9	Low