Currencies | Sep 21 2015
By Ilya Spivak, currency strategist, FXCM
The Australian Dollar advanced for a second consecutive week after finding support just below the 0.69 figure against its US counterpart. A recovery in risk appetite looks to have been the driving catalyst behind the advance, with prices tracking higher alongside the MSCI World Stock Index, a proxy for global sentiment trends. A quiet economic calendar on the domestic front is likely to see external factors remain at the forefront in the week ahead.
Price action in the aftermath of last week's FOMC monetary policy announcement suggested the central bank's reticence to begin stimulus withdrawal unnerved investors. The statement accompanying the rate decision warned that "recent global economic and financial developments may restrain economic activity," alluding to market-wide tumult that broke out in mid-August. The threat of slower US growth against a backdrop of lingering weakness in the Eurozone and China undermined the outlook for global performance at large, weighing on sentiment.
This narrative is likely to carry forward in the week ahead, with markets monitoring a steady stream of activity data from the world's major output nodes for direction cues. An ample helping of US indicators including home sales, durable goods orders and flash PMI figures will inform on the state of the world's largest economy. September's preliminary PMIs are also due from the Eurozone and China.
On balance, global economic news-flow has increasingly disappointed relative to consensus forecasts since late August out of the G10 and emerging-market economies alike. This suggests analysts' models of global output trends have tended to be more optimistic than reality has warranted, opening the door for additional downside surprises ahead. Soft outcomes offering additional fodder for worldwide slowdown fears is likely to keep risk appetite under pressure, weighing on the Aussie.
Reprinted with permission of the publisher. The above story can be read here on the website www.dailyfx.com.
The views expressed are not by association FNArena's (see our disclaimer).
For real time news and analysis, please visit http://www.dailyfx.com/real_time_news
DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.
Forex Capital Markets is headquartered at Financial Square 32 Old Slip, 10th Floor, New York, NY 10005 USA.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before you decide to trade the foreign exchange products offered by Forex Capital Markets, LLC, Forex Capital Markets Limited, inclusive of all EU branches, FXCM Asia Limited, or FXCM Australia Limited, any affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively "FXCM Group"] you should carefully consider your objectives, financial situation, needs and level of experience. If you decide to trade foreign exchange products offered by FXCM Australia Limited you must read and understand the Financial Services Guide and the Product Disclosure Statement. FXCM Group may provide general market information and commentary which is not intended to be investment advice and the content of this email must not be construed as personal advice. By trading, you could sustain a total loss of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading in foreign exchange products. Foreign exchange products are only suitable for those customers who fully understand the market risk. FXCM recommends you seek advice from a separate financial advisor.
FXCM Group assumes no liability for errors, inaccuracies or omissions in these materials and does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM Group shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this e-mail is strictly confidential and is only intended for use by the recipient. All e-mail sent to or from this address will be received by the FXCM corporate e-mail system and is subject to archival and review by someone other than the recipient."
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.