Dollar takes a rest ahead of Jackson Hole

Dollar steady on a data-dry start to the week

It has been a quiet start to the week in currency markets, with most pairs confined to tight ranges with little on the data calendar to spur trading. The dollar, as measured against a basket of six currencies, had a marginal bullish bias, while USD/TRY was largely sidelined after a roller-coaster seven days as the country starts public holidays for the entire week.

USD/CNH rose for the first time in three days despite the People’s Bank of China setting a stronger yuan fix versus the dollar for the second straight day. USD/CAD consolidated Friday’s drop after inflation data heightened speculation of a Bank of Canada rate hike sooner rather than later.

USD/CAD Daily Chart

Source: Oanda fxTrade

Aussie government popularity takes a hit

An opinion poll released this morning showed Malcolm Turnbull’s Liberal-National coalition slipping further behind the opposition Labor party in the popularity stakes. The Fairfax-Ipsos poll showed the gap widening 2% to 10%, 55% versus 45%, in favor of Labor. The Australian dollar held a slightly weaker bias in the Asian session, sliding 0.1% to 0.7307. That would mean the Aussie has snapped a three-day rising streak which helped it gain 1.45% versus the dollar since the low last Wednesday. The pair continues to be capped by the 55-day moving average, which is at 0.7413 today.

AUD/USD Daily Chart

Source: Oanda fxTrade

Economists more hawkish on BOE rate outlook

In the latest survey conducted by Bloomberg, economists expect the Bank of England to hike rates twice next year, bringing the base rate to 1.25% by end-2019. That’s 25 bps higher than in the survey conducted in July. The first of next year’s hikes is not expected until after Brexit is concluded in March, possibly at the May meeting. GBP/USD showed little reaction to the survey, hovering at 1.2743, slightly below today’s opening price in quiet, subdued trading activity.

Jackson Hole Symposium caps off a relatively quiet data week

After a slow Monday, Tuesday (Asia time) sees a speech from RBA Governor Lowe and the release of minutes of the last RBA meeting while those of the Fed’s last meeting follow early Thursday morning (Asia time). The Kansas Fed’s Jackson Hole meeting kicks off on Thursday and lasts through Sunday with markets eager to hear if Jerome Powell hints at any hawkish changes to the Fed’s rate outlook. Speeches from other central bankers could prompt headlines but none are seen to be in such an aggressive hawkish position as the Fed.

This week’s full data calendar can be viewed here: https://www.marketpulse.com/economic-events/

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.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.