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Currency Market Analysis

Aug 05, 2021 | Currency Market Analysis

Global Themes

USD jumps as Fed’s Clarida looks to hikes

The US dollar was higher overnight after Federal Reserve vice-chair Richard Clarida said he expected tapering to begin later this year and US official rates would likely be raised towards the end of 2022.

Clarida is second-in-charge of the US Fed and his commentary was seen as significant.

The USD was stronger despite a big miss in the US’s ADP US jobs report.

The ADP jobs report found only 330k new jobs were created in July – well below the 695k expected.

Kiwi flies

The USDCNH rebounded from six-week lows to end broadly flat.

The euro and Japanese yen both lost ground.

The New Zealand dollar gained after strong employment numbers reported yesterday found a 1.0% improvement in the labour market over the June quarter pushing the unemployment rate down to an incredible 4.0%.

The strong result caused markets to increasingly speculate the Reserve Bank of New Zealand might raise interest rates when it next meets on 18 August.

BoE due

The Australian balance is today’s major release with the market looking for a massive AUD10.5b surplus boosted by strong demand – and high prices – for iron ore.

Australian trade balance is due at 9.30am.

The Bank of England is in focus tonight with the rapid reopening of the UK economy causing some forecasters to suggest the UK central bank might soon consider winding back on stimulus.

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