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Currency Market Analysis

Jun 16, 2017 | Currency Market Analysis

Global Themes

USD stages comeback as focus turns to Fed

The US dollar was strongly higher overnight as markets returned focus to the prospect of rising US interest rates.

The US dollar, as measured by the US dollar index, had its best one-day gain since 18 January 2017 overnight following Wednesday night’s Federal Reserve move to hike US interest rates to 1.25%.

The USDSGD jumped sharply from eight-month lows to gain 0.6%.

Pound rebounds

The SGD was mixed in other markets.

The SGD was stronger versus the euro but saw large losses versus the British pound after last night’s Bank of England meeting signalled the UK central bank was considering raising interest rates.

The AUD was higher after a strong reading from the Australian employment market. Yesterday’s job data saw the official unemployment rate fall from 5.7% to 5.5%.

The New Zealand dollar fell after a weaker NZ GDP result. March-quarter gross domestic product, which measures economic growth, was reported at 0.5% (versus expectations of 0.7%) while the annual rate was 2.5% (versus expectations for 2.7%).

BoJ meeting

Today’s main focus will be on the Bank of Japan meeting.

While there’s no expectations for a change in policy, the BoJ is likely to signal that it plans to maintain its stimulus program.

From the US, the property market will be the main driver, with housing starts and building permits both due.

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