FX Strategy Weekly by Lloyds TSB

The FOMC’s hint that more QE may be coming in November sent the USD into a renewed decline against all the traditionally more risky currencies, with the EUR, AUD and Scandis leading the way. Dovish FOMC puts more downward pressure on the USD

The FOMC’s hint that more QE may be coming in November sent the USD into a renewed decline against all the traditionally more risky currencies, with the EUR, AUD and Scandis leading the way. It is hard to oppose this trend short term even though the USD is reaching very cheap levels. The USD made a new historic low against the CHF this week, but it seems likely that more risk positive currencies will perform better next week as a more positive risk tone emerged at the end of the week. The AUD is in focus as parity approaches, but there is better value in the NOK and SEK. GBP should also be a strong performer as EU related payments are expected to push EUR/GBP lower. The US ISM on Friday will be the main data focus, with some chance of a USD recovery both on a weak and a strong number.

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