Currency Market Analysis

Sep 05, 2019 | Currency Market Analysis

Global Themes

USD falls as Fed 50-basis point cut returns to agenda

The US dollar saw a second day of losses after a series of speeches from US Federal Reserve officials suggested the central bank was considering a 50-basis point when it meets on 19 September.

Most notably, St Louis Jed president said current rates were “too high” and the central bank should aim to get to “the right point now”.

The market pricing for a 50-basis point cut rose to close to 20% as the US dollar fell.

Pound rallies

The British pound extended its strong rebound overnight after the UK parliament voted to delay Brexit and prime minster Boris Johnson’s plan for an early election was blocked by the opposition Labour Party.

The AUDUSD jumped to the highest level in three weeks overnight as higher sharemarkets and a weaker US dollar boosted the pair.

The Aussie was higher despite a weak June-quarter economic growth reading that saw annualised GDP fall to the lowest level since the global financial crisis.

US data

Tonight, the attention shifts to the US ahead of the Fed’s mid-month meeting.

Tonight, the ADP jobs report, unit labour costs and factory orders are due, while tomorrow sees the all-important US non-farm employment report.

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