Gold prices bounce from one-week low; Fed minutes loom
The dollar continues to assert itself, rising for 7 of the past 10 sessions on the dollar index, but it’s by no means universal. The Aussie is the main exception, having risen nearly 0.5% vs. the dollar over the past two weeks.
The overnight activity here has seen a brief push above the 0.9450 area, helped by the better than expected manufacturing PMI data in China, which rose to 52.0 from 50.7.
The 0.95 level continues to act as a barrier after the comments from RBA Governor Stevens earlier in the month which sent the Aussie lower from this level.
The other point of note overnight was the kiwi in the wake of the expected rate hike from the RBNZ to 3.50%. The central bank described the current rate as being at an “unjustified and unsustainable” level. There was a further indication that rates were likely to pause, before adjusting “toward a more neutral level”.
The kiwi is currently down 1.5% vs. the dollar and to a 6 week lows. This comes on the back of the weakening already seen ahead of the meeting, as the market was largely anticipating a signal that rates were likely to pause. The comments on the currency were less expected, hence the reaction.
Focus today is with retail sales data in the UK, with mixed messages coming from the central bank over the past 24 hours leaving cable close to the 1.70 level. Claims and new home sales seen in the US later.
Further meetings are being held in Europe with regards to sanctions on Russia, which could have FX implications, especially if more aggressive moves are seen, moreso on sterling.