Morning FX Colour: The BoE in focus, as political volatility travels to New Zealand


Australian Employment figures were released overnight, with the headline seeing a stela beat; Augusts figure, 54.2k vs. Exp. 20k saw AUD/USD bounce off yesterday’s low, reclaiming 0.80. The poor Chinese Industrial Production and Retail Sales was rebuffed by AUD; despite misses, figures still impressive. Later volatility was seen in AUD/NZD, with the NZD weakness sparking a second bullish surge, attempting to consolidate back in last week’s range.


The NZD weakness was triggered by the latest New Zealand Election Poll, the latest One News Colmar Brunton poll showing: National: 40% Labour: 44% Green: 7%. The increases for Labour and Green dented the Kiwi, yet the move was quickly retraced, still trading above pre-announced levels. NZD/USD found support at the week’s low around the 0.7210 area, bouncing back to the weeks range are stacked bids were evident at this level, filled on the aforementioned poll results.


The greenback’s strength was evident in Wednesday’s trade, as the DXY managed to hold onto gains throughout the US and Asian sessions. The dollar index failed to break 91.00 in September, and some USD optimism has crept into the market this week, as policy develops and geopolitical concerns dampen.


Market fears to the rogue nation seem to have fallen, however, North Korea’s commentary has continued, with reports stating that the NK state agency threatened to “sink” Japan and turn the US to “ashes and darkness” for supporting sanctions against North Korea. USD/JPY was not concerned, continuing to trade at month highs.


Sterling and the BoE will be the focus today; with markets pricing the BoE to vote 7 – 2 and keep rates on hold. The consensus is at 7 – 2, however, with Haldane and new member Ramsden’s votes not certain, we could see a shock in the market. Cable expects some volatility, with Cable volume at one of its highest readings since Brexit. 1-week volume has increased from 8.25 to 10.7, with the 10.7 now set to capture the FOMC. 1-month has also increased, with 1.34 – 1.35 call hedges demand increasing, possibly implying fears of a surprise vote split later today.

** Please do see the RANsquawk ‘Research Suite’ for previews on the BoE and SNB **

14 Sep 2017 - 08:05- ForexBank Speaker- Source: RANsquawk

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