Australia Raises Benchmark Rate to 3.25 Percent

The U.S. Dollar is expected to open lower against all major currencies this morning except the British Pound. Increased appetite for more risky assets is pressuring the Dollar overnight while weak fundamentals continue to hurt the British Pound.

The U.S. Dollar is expected to open lower against all major currencies this morning except the British Pound. Increased appetite for more risky assets is pressuring the Dollar overnight while weak fundamentals continue to hurt the British Pound.

The Dollar is also seeing selling pressure following a story that Saudi Arabia and other large crude oil customers such as China may be considering pricing a barrel of oil in a currency other than the Dollar.

The Reserve Bank of Australia hiked its benchmark interest rate overnight by 0.25% to 3.25 percent. The news wires are calling this “unexpected”, but the trading action yesterday indicated that traders were already beginning to price in this hike. The AUD USD is trading higher based on this action. The NZD USD is also trading higher which is an indication that the Asian-Pacific economic zone may be outperforming the U.S. and Europe.

Increased demand for risk is helping to boost the EUR USD. Yesterday’s better than expected U.S. ISM Services Sector Report is helping to boost equity prices as well as some commodities. The move by the RBA is also renewing confidence that a global economic recovery may be starting soon.

The GBP USD is trading lower following the release of a worse than expected U.K. Factory Output Report. Traders are also reluctant to buy the Pound ahead of Thursday’s key Bank of England meeting. Investors are certain interest rates will remain unchanged at 1%, but aren’t sure whether the BoE will make adjustments to its asset-buyback program.

Greater demand for risky assets is pressuring the Dollar versus the Japanese Yen. Traders are taking the Yen up slowly because of fear of an intervention by the Bank of Japan if volatility gets too high and if prices move abnormally or without economic reasons.

Higher crude oil and equity prices are boosting the Canadian Dollar. Although the USD CAD remains inside of a sizeable range, price increases in both of these asset classes is expected to keep upside pressure on the Canadian Dollar.

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

Disclainer: