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Currency Market Analysis

Sep 16, 2019 | Currency Market Analysis

Global Themes

Markets on edge after Saudi strike, Fed due

Financial markets have started the new week on a nervous footing after a weekend strike on a Saudi oil facility unsettled investors.

The week’s Federal Reserve decision might also inject volatility into the week ahead.

Crude oil jumped 15% this morning as tensions grew after the attack on the Abqaiq facility – the world’s largest oil processing plant – was claimed by Houthi rebels in Yemen.

US Secretary of State Mike Pompeo blamed Iran in a tweet sparking fears of an escalation in tensions between the US and Iran.

AUDUSD steady

The AUDUSD remained broadly steady with the pair still close to six-week highs.

The risk-sensitive AUDJPY was the worst hit – down 0.3% – while the safe-haven Swiss franc also jumped with the AUDCHF down 0.2%.

Fed watch 

The main economic event this week will be Thursday’s Federal Reserve decision with the market signalling an 87% chance of a cut (source: Reuters).

The Fed’s outlook and plan for future moves will likely be the major driver of the market’s reaction.

Otherwise, Chinese industrial production is due at midday (AEST) with the recent slowdown in Chinese activity a key concern across markets.

The Reserve Bank of Australia minutes are due tomorrow.
By Steven Dooley, Currency Strategist APAC

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