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Currency Market Analysis

Nov 02, 2017 | Currency Market Analysis

Global Themes

Markets on edge as new Fed head looms

The US dollar was mostly higher overnight as the US Federal Reserve upgraded its view on the US economy.

At its November meeting, the Fed raised its view on US economic growth from "moderate" to "solid". The Fed made no change to interest rates but is widely expected to raise rates in December.

The meeting was overshadowed by confirmation from US president Donald Trump that he would announce the new Fed chair tonight.

The market "will be extremely impressed" said the president in a statement.

Oil boost

The USDSGD eased back as a higher roil price boosted the Singapore dollar.

Oil traded to two-year highs overnight.

The euro, pound and Japanese yen were all significantly lower.

The AUD was higher in overnight trade, boosted by the rally in commodities.

BoE likely to hike

Today's focus shifts back to Australia with trade balance number due at 8:30am.

The market is looking for a AUD1.4b trade surplus. A higher number could be supportive for the AUD.

For the UK, a widely expected Bank of England rate hike could boost the British pound in the near term. Over the longer term, the UK's Brexit woes might pressure the GBP.

Finally, Fed board member Jerome Powell, the leading candidate for the Fed chair, speaks at 8:30pm.


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