Dollar and Yen to Rise as Aussie Falls if FOMC Stokes Rate Hike Bets

Date

9/17/2014 3:37:09 AM

(MENAFN- DailyFX) DailyFX.com - r>

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" style="text-align:justify"> Talking Points:

Pound May Look Past BOE Minutes as Scotland Referendum Looms Large
US Dollar and Yen to Rise as Aussie Declines if FOMC Stokes Rate Hike Bets
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The publication of minutes from September’s Bank of England policy meeting headlines the economic calendar in European trading hours. Investors will be watching for the continued evolution of the voting pattern on the rate-setting MPC committee following Augusts’ split 7-2 decision.

UK economic news-flow has broadly improved relative to consensus forecasts and commentary from BOE officials has been broadly supportive over recent weeks. This means that it is quite possible that the hawks added new members to their ranks this month.

While such an outcome may offer a short-term boost to the British Pound significant follow-through seems unlikely. Indeed traders are likely to withhold directional conviction until the outcome of this week’s Scottish Independence referendum is behind them.

Later in the day the spotlight turns to the FOMC policy announcement. This outing will be accompanied by release of an updated set of forecasts for key metrics of US economic activity as well as press conference from Chair Janet Yellen.

The Fed has warned about complacently buoyant risk appetite as the end of QE3 looms ahead next month. If policymakers opt to shake things loose with upbeat activity projections and/or a hawkish outing from Ms Yellen the US Dollar may renew its advance after yesterday’s pullback.

Critically the onset of risk aversion may also materialize if traders perceive the Fed’s tone as having shifted toward the hawkish side of the spectrum. Successive rounds of QE have proven supportive for risk appetite. Fear of a relatively sooner unwinding of stimulus may reverse this dynamic with sentiment-geared Australian Canadian and New Zealand Dollars likely to bear the brunt of selling pressure while the Yen gains amid an unwinding of carry trades.

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Asia Session

" style="text-align:center"> GMT	" style="text-align:center"> CCY	" style="text-align:center"> EVENT	" style="text-align:center"> ACT	" style="text-align:center"> EXP	" style="text-align:center"> PREV
" style="text-align:center"> 22:45	" style="text-align:center"> NZD	Current Account Balance (NZ$) (2Q)	" style="text-align:center"> -1.000B	" style="text-align:center"> -1.065B	" style="text-align:center"> 1.468B
" style="text-align:center"> 22:45	" style="text-align:center"> NZD	Current Account GDP Ratio (2Q)	" style="text-align:center"> -2.5%	" style="text-align:center"> -2.5%	" style="text-align:center"> -2.7%
" style="text-align:center"> 0:30	" style="text-align:center"> AUD	Westpac Leading Index (MoM) (AUG)	" style="text-align:center"> -0.1%	" style="text-align:center"> -	" style="text-align:center"> -0.1%
" style="text-align:center"> 1:45	" style="text-align:center"> CNY	MNI Business Indicator (SEP)	" style="text-align:center"> 52.2	" style="text-align:center"> -	" style="text-align:center"> 57.3

European Session

" style="text-align:center"> GMT	" style="text-align:center"> CCY	" style="text-align:center"> EVENT	" style="text-align:center"> EXP	" style="text-align:center"> PREV	" style="text-align:center"> IMPACT
" style="text-align:center"> 6:00	" style="text-align:center"> EUR	EU 25 New Car Registrations (YoY) (AUG)	" style="text-align:center"> -	" style="text-align:center"> 4.5%	" style="text-align:center"> Low
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	Bank of England Sep Meeting Minutes	" style="text-align:center"> -	" style="text-align:center"> -	" style="text-align:center"> High
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	Claimant Count Rate (AUG)	" style="text-align:center"> 2.9%	" style="text-align:center"> 3.0%	" style="text-align:center"> Medium
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	Jobless Claims Change (AUG)	" style="text-align:center"> -30.0K	" style="text-align:center"> -33.6K	" style="text-align:center"> Medium
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	ILO Unemployment Rate (3M) (JUL)	" style="text-align:center"> 6.3%	" style="text-align:center"> 6.4%	" style="text-align:center"> Medium
" style="text-align:center"> 8:30	" style="text-align:center"> EUR	Employment Change (3M/3M) (JUL)	" style="text-align:center"> 120K	" style="text-align:center"> 167K	" style="text-align:center"> Low
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	Average Weekly Earnings (3M/Y) (JUL)	" style="text-align:center"> 0.5%	" style="text-align:center"> -0.2%	" style="text-align:center"> Low
" style="text-align:center"> 8:30	" style="text-align:center"> GBP	Weekly Earnings ex Bonus (3M/Y) (JUL)	" style="text-align:center"> 0.7%	" style="text-align:center"> 0.6%	" style="text-align:center"> Low
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Eurozone CPI (MoM) (AUG)	" style="text-align:center"> 0.1%	" style="text-align:center"> -0.7%	" style="text-align:center"> Medium
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Eurozone CPI (YoY) (AUG F)	" style="text-align:center"> 0.3%	" style="text-align:center"> 0.3%	" style="text-align:center"> Medium
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Eurozone CPI - Core (YoY) (AUG F)	" style="text-align:center"> 0.9%	" style="text-align:center"> 0.9%	" style="text-align:center"> Medium
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Eurozone Construction Output (MoM) (JUL)	" style="text-align:center"> -	" style="text-align:center"> -0.7%	" style="text-align:center"> Low
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Eurozone Construction Output (YoY) (JUL)	" style="text-align:center"> -	" style="text-align:center"> -2.3%	" style="text-align:center"> Low
" style="text-align:center"> 9:00	" style="text-align:center"> CHF	ZEW Survey (Expectations) (SEP)	" style="text-align:center"> -	" style="text-align:center"> 2.5	" style="text-align:center"> Low

Critical Levels

" style="text-align:center"> CCY	" style="text-align:center"> Supp 3	" style="text-align:center"> Supp 2	" style="text-align:center"> Supp 1	" style="text-align:center"> Pivot Point	" style="text-align:center"> Res 1	" style="text-align:center"> Res 2	" style="text-align:center"> Res 3
" style="text-align:center"> EURUSD	" style="text-align:center"> 1.2815	" style="text-align:center"> 1.2887	" style="text-align:center"> 1.2924	" style="text-align:center"> 1.2959	" style="text-align:center"> 1.2996	" style="text-align:center"> 1.3031	" style="text-align:center"> 1.3103
" style="text-align:center"> GBPUSD	" style="text-align:center"> 1.5950	" style="text-align:center"> 1.6100	" style="text-align:center"> 1.6189	" style="text-align:center"> 1.6250	" style="text-align:center"> 1.6339	" style="text-align:center"> 1.6400	" style="text-align:center"> 1.6550

" style="text-align:justify"> -- Written by Ilya Spivak Currency Strategist for DailyFX.com

" style="text-align:justify"> To receive Ilya's analysis directly via email please SIGN UP HERE

" style="text-align:justify"> Contact and follow Ilya on Twitter: @IlyaSpivak

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