** YoY = Year over Year ** MoM = Month over Month | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
USD The Dollar fell again on Wednesday to a new one year low versus a basket of major currencies as positive outlooks and data continued to fuel the markets risk appetite. The US Department of Labor’s Consumer Price Index rose .4% in August after having been steady in July. Expectations were for a .3% gain. The CPI measures the average cost of basic consumer goods – the report had little effect on the trend in the Forex market for USD pairs. At 10:00PM GMT, the US Dollar was down .5% to the Euro to 1.4727, down .1% to the Japanese Yen to 90.95 which was up from the lowest levels in the USD/JPY since February. The Dollar also declined against the Canadian Dollar, dropping ½ of a percent to 1.0668 and was down 1.4% versus the Australian Dollar to .8743. Chart: AUD/JPY Something strange has been happening in the Forex market that is rarely seen; the AUD and JPY have both been rallying at the same time. According to historical data, this trend is unsustainable - these currencies normally lie at the opposite end of the risk appetite spectrum. The JPY is gaining on comments from the incoming administration that suggest a lack of concern over the strong JPY, while the AUD seems to be the most popular currency to buy in the new USD carry trade. AUD is winning the race against the JPY over the last couple of days, and if risk appetite stays robust while bond yield rise a bit more, then we could be in for a retest of that 80.00 area again. If equities do reverse and start to fall however, look out below.... | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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