The dollar index remains subdued after a shock speech from FOMC chair Powell which proclaimed that rates were now in neutral territory (i.e. rates may not have further to go). Previously markets had been pricing in further rate hikes, resulting in dollar weakness as traders reign in their rate hike bets. There was heavy selling on the dollar index with further selling this morning.
Dollar pairs are enjoying gains across the board, with the AUD/USD set to test the highs above 0.7350. The EUR/USD is follow up on yesterday’s gains, with the GBP/USD following suit despite dire Brexit predictions from the Bank of England. The EUR/GBP is neutral this morning.
The USD/CAD is pulling back from the highs, while the USD/CHF continues to repeal from the parity line after heavy selling yesterday that puts the USD/CHF at its lowest levels for November.
Yen pairs are mixed, with the USD/JPY falling back further from the 114.0 level. The GBP/JPY is lower though, continuing its back and forth pattern. The EUR/JPY is slipping just below the 129.00 level. The AUD/JPY is holding up well though and is unchanged just below the 83.00 level.
ECB President Draghi speaks at 08.00.
At 09.30, we have UK net lending to individuals.
Canadian current account is at 13.30, with US PCE price index and personal spending at the same time.
At 19.00, we have the release of the FOMC meeting minutes.
Despite holding up relatively well this morning, the pound remains under intense pressure. By contrast, the Australian dollar continues to hold up well and even if the pound were to stand still, there is still downside potential for the GBP/AUD.