Investors were caught off guard by the news that the Australian unemployment rate had dropped from 5.3% to 5.0% in September, although AUD exchange rates failed to capitalise on the data.
The US dollar started out on a poor footing last week, driven lower by US factory orders, which were revealed to have contracted even faster than expected in April.
There appeared to be a more underlying reason for the downturn in USD last week however as the currency continued to slide on Tuesday, despite a solid reading from the latest US services PMI.
This can be partly explained by a fall in US treasury yields as well as a Reuters poll, in which the majority of economists appeared pessimistic about the chances of the dollar rally lasting throughout 2018.
Meanwhile the second half of the week saw investors also remain skittish around the US dollar, partly driven by Donald Trump’s increasingly combative tone on Twitter ahead of the G7 summit, which saw him rail against other world leaders over their trade policies.
Looking to this week’s session, movement in the US dollar is likely to be dominated by the Fed’s policy meeting on Wednesday.
With a rate hike from the bank looking inevitable, the focus for markets is likely to be on the Fed’s forward guidance as investors look to gauge how many more rate hikes they can expect in 2018.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)