Action on the OZ has been very limited ahead of tonight’s NFP.
There was a muted market response to the better than expected retail sales print earlier today as the market remains driven by the same external factor that dictated price action all week
Focus remains on the OIL patch, which is providing an updraft to the commodity bloc of currencies and providing a floor for Aussie dollar price action. But its just one of those flip flop kind of days where
the USD is trading back on forth with little conviction, offering no direction but not untypical of any other pre-NFP session in recent times.
Overnight US 10’s peaked at 2.49 % just shy of the 2015 high of 2.5 % as the higher US yields continue to wear on the equity markets, despite the supportive gains in the energy sector.
The Aussie dollar remains in offer mode, but the Bears are tempered by better than expected China PMI data and a rebound in iron ore prices. We’re in a tug of war between the dominant US dollar strength and rebounding commodity prices. While the USD bull run has run out of steam entering weeks end on the back of pre-NFP position squaring, the risk-reward over the short term is indeed pointing to higher USD yields which should see the USD reassert its dominant position next week.
Given how fragile industrial commodity prices are in the wake of recent regulatory actions in China, the Aussie dollar continues to offer the best short in the Commodity bloc of currencies.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.