Currency Market Analysis

Jan 11, 2019 | Currency Market Analysis

Global Themes

USD rebounds from lows as Fed signals bond sales to continue

The US dollar was mostly higher overnight – although the USDSGD still finished the session lower -- as global shares extended their recent gains.

The US’s Dow Jones index is now up more than 10% since Christmas Eve as markets rebound from the sharp losses seen in November and December.

The US dollar was also boosted as the US Federal Reserve chair Jerome Powell signalled the Fed’s balance sheet reduction, a bond-selling strategy that lifts the greenback, is likely to continue.

Franc weakens

The Swiss franc fell after the Swiss National Bank announced a CHF15b loss.

The euro fell after last night’s European Central Bank minutes signalled the ECB considered downgrading economic forecasts at their last policy meeting.

US inflation

Today’s focus is on Australian retail sales with the November figures due.

Australian retail sales have recently softened as weaker house prices impact on households. The numbers haven’t beaten expectations since the June report.

Later, US inflation will be released, a key release with focus on the US Federal Reserve’s next move on interest rates. A higher number could boost the USD.

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