Aussie Rallies on Potential Rate Hike

The AUD USD posted a strong gain on Wednesday following the news that the Australian economy grew more than expected. The report showed that Aussie GDP was up 0.6%. Traders attributed this gain to the positive influence from government stimulus that encouraged consumer spending. The rally could continue tomorrow as investors may begin to price in the possibility of a rate hike at the next central bank meeting on October 6.

The AUD USD posted a strong gain on Wednesday following the news that the Australian economy grew more than expected. The report showed that Aussie GDP was up 0.6%. Traders attributed this gain to the positive influence from government stimulus that encouraged consumer spending. The rally could continue tomorrow as investors may begin to price in the possibility of a rate hike at the next central bank meeting on October 6.

News that the Australian economy was growing along with generally weak U.S. equity markets helped keep pressure on the NZD USD throughout the day. A break in U.S. stock markets could trigger weakness in the New Zealand Dollar if demand drops from higher yielding assets.

Oversold technical factors helped boost the GBP USD on Wednesday. Trading was thin as most major players remained on the sidelines ahead of this Friday’s U.S. Nonfarm Payrolls Report. Fundamentally, yesterday’s decline in U.K. manufacturing sent a signal that the economy is still contracting. This means that the Bank of England is not likely to announce an ending to its quantitative easing program at its next meeting on September 10th.

The EUR USD posted a modest gain buoyed mostly by short-covering on light volume. Traders were reluctant to take big positions ahead of tomorrow’s European Central Bank meeting. The ECB is expected to announce that interest rates will remain at 1.0%. In addition, expect the ECB to say they are encouraged by the recent reports of growth out of the Euro Zone but still concerned about high unemployment and low consumer spending.

The USD JPY continued to weaken as the Japanese Yen has now replaced the Dollar as the main safe haven currency. Attractive yields in Japanese government bonds have also attracted the attention of global investors.

Weaker equity and energy markets weighed on the Canadian Dollar on Wednesday. Trading is expected to remain tight and thin as investors have decided to back away from the markets until they can get direction following Friday’s U.S. Unemployment Report.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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