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Currency Market Analysis

Dec 20, 2018 | Currency Market Analysis

Global Themes

US jumps as Fed signals more hikes coming

The US dollar was higher overnight after the US Federal Reserve lifted US interest rates 25 basis points in its fourth rate hike this year.

The pair fell more than 1.6% from the overnight highs as markets reacted with shock to the Fed’s decision to broadly hold the line in its forecasts for further interest rate increases in 2019.

After a large selldown global sharemarkets and weakening global economic data, the market had been watching for a clear shift in tone from the US central bank.

The Fed indicated it remains confident in the US economy as it lowered its median forecast from three to two hikes in 2019.

Aussie hit

The USDSGD climbed 0.2%.

The commodity currencies were the hardest hit with the AUDSGD down 0.9% as it neared ten-year lows.

Bank of Japan

The commodity currencies suffered further in early trade with NZ GDP missing expectations while Australian unemployment rose from 5.0% to 5.1%.

Later, we have the Bank of Japan and Bank of England both meeting.

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