US Dollar May Extend Gains as Fed Minutes Foreshadow Rate Hike

Talking Points:

US Dollar May Find Fuel for Further Gains on Hawkish Fed Meeting Minutes
Euro, Pound Eye Central Bank Commentary to Inform On-Coming Policy Bets
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A quiet economic calendar in European trading hours will put the spotlight on minutes from October’s FOMC meeting. The policy announcement seemed decidedly hawkish and markets interpreted it as such, with the US Dollar soaring and Fed Funds futures shifting to put the priced-in probability of a December rate hike in the 60-70 percent range.Subsequent commentary from Fed officials likewise leaned in favor of late-2015 “liftoff”. More of the same in the Minutes document may bolster imminent tightening bets, pushing the greenback upward.

On the scheduled official commentary front, remarks from the ECB’s Yves Mersch and the BOE’s Ben Broadbent are on the docket. Traders will comb rhetoric for clues about the mechanics of on-coming stimulus expansion by the Eurozone central bank and the expected tightening timeline of the UK one. Comments suggesting the ECB might adopt a restrained approach – such as expanding the spectrum of QE-eligible assets – could push the Euro upward. Alternatively, hints at an increase in the size of monthly purchases or a cut in the deposit rate may weigh on the single currency. As for the UK, the time needed to get past disinflation imported via low oil prices and a strong exchange rate is likely to be critical.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

23:00

AUD

Conf. Board Leading Index (MoM) (SEP)

-0.1%

–

-0.4%

23:30

AUD

Westpac Leading Index (MoM) (OCT)

0.1%

–

0.1%

00:30

AUD

Wage Price Index (QoQ) (3Q)

0.6%

00:30

AUD

Wage Price Index (YoY) (3Q)

2.3%

01:30

CNY

China Property Prices (OCT)

–

European Session

GMT

CCY

EVENT

EXP

IMPACT