US Dollar May Rise as Brainard Feeds Fed Rate Hike Speculation -

Talking Points:

  • Yen gains, commodity FX pressured amid risk aversion in Asian trade
  • Risk-off mood seems to be fueled by swelling Fed rate hike speculation
  • US Dollar may rise if Fed's Brainard echoes colleagues' hawkish tone

The Japanese Yen outperformed as Asian stocks followed Wall Street lower at the start of the trading week, boosting demand for the anti-risk currency. The sentiment-sensitive Australian, Canadian and New Zealand Dollars faced selling pressure, although the magnitude of overnight moves was relatively restrained.

The risk-off mood seems to reflect firming Fed rate hike bets as a steady stream of hawkish comments from central bank officials paints an increasing sense of consensus on the rate-setting FOMC committee. The spotlight now turns to a hastily-scheduled speech from Governor Lael Brainard , arguably the most dovish of the current crop of voting policymakers.

Brainard will offer the last bit of commentary ahead of the week-long blackout period when Fed officials stay mum ahead an FOMC policy announcement. This offers her an opportunity to set the tone for speculation in the near term. If she echoes the tone adopted by her colleagues in recent weeks, an up-shift in the projected rate hike path is may boost the US Dollar and undermine sentiment trends further.

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Asia Session

23:50 JPY Machine Orders (MoM) (JUL) 4.9% -2.9% 8.3%
23:50 JPY Machine Orders (YoY) (JUL) 5.2% 0.3% -0.9%
23:50 JPY PPI (MoM) (AUG) -0.3% -0.1% 0.0%
23:50 JPY PPI (YoY) (AUG) -3.6% -3.4% -3.9%
1:30 AUD Credit Card Purchases (JUL) A$23.6b - A$25.5b
1:30 AUD Credit Card Balances (JUL) A$51.3b - A$52.2b
6:00 JPY Machine Tool Orders (YoY) (AUG P) - -19.7%

European Session

8:00 EUR Italy Unemployment Rate Quarterly (2Q) 11.5% 11.6% Low
8:00 CHF Total Sight Deposits - 515.8b Low
8:00 CHF Domestic Sight Deposits - 438.7b Low

Critical Levels

CCY Supp 3 Supp 2 Supp 1 Pivot Point Res 1 Res 2 Res 3
EUR/USD 1.1067 1.1153 1.1193 1.1239 1.1279 1.1325 1.1411
GBP/USD 1.3089 1.3185 1.3226 1.3281 1.3322 1.3377 1.3473

--- Written by Ilya Spivak, Currency Strategist for

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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