Global overview
FX markets were cautious ahead of major central bank decisions from the Federal Reserve and Bank of England. The euro was one of the strongest performers after last week’s European Central Bank decision.
Currency markets on the edge ahead of Fed
FX markets were broadly on hold overnight with traders on edge ahead of key central bank decisions from the US Federal Reserve and the Bank of England.
The Fed seems assured to hold rates steady on Thursday morning – current market pricing from Refintiv sees only a 1.0% chance of an increase.
But there remains a 30% chance, according to markets, for an interest rate hike in November.
With core inflation cooling, but headline inflation climbing, the Fed’s commentary this week will be vital. Will the Fed remain concerned about inflation and keep rate-hike expectations elevated? Or will a more optimistic reading of the US economy push expectations down and weigh on the USD?
Euro gains after ECB
In a quiet session, the AUD/USD gained 0.1%.
The NZD/USD gained 0.3%.
The USD/SGD gained 0.1% while the USD/CNY climbed 0.2%.
The euro was one of the strongest performers overnight, up 0.3%, as markets continue to react to last week’s European Central Bank decision to hike rates.
On the other hand, the British pound was weaker ahead of Thursday night’s Bank of England decision.
Bullock takes control at RBA
The final Reserve Bank of Australia meeting on the watch of Philip Lowe sees the release of its minutes today.
Lowe’s last meeting was widely-ween as confirmation that the RBA is on hold with no move likely until after the September-quarter inflation numbers (due in late October).
Former governor Lowe leaves with an unenviable track record – Australian annual headline inflation was in the RBA’s 2-3% target for only four out of the 28 quarters of his seven-year term.
However, markets will now be looking to the future, with new RBA governor Michelle Bullock taking control of the central bank yesterday.
AUD/GBP nears top of recent range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 22 September
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
