Author : Brett Gordon
AUD opens higher as the USD weakened following US Fed Chairman Powell’s testimony to Congress overnight.
The US Dollar lost ground across most major currencies as US Fed Chairman Jerome Powell delivered a dovish statement to Congress, which has reinforced the likelihood of a rate cut later this month. FOMC Meeting minutes released shortly after Powell’s speech reinforced the dovish message, with many participants seeing near term cuts if global trade and other risks continue to weigh on the economic outlook. Rate cut expectations had diminished after the strong employment numbers from last week, and the resumption of U.S – China trade talks this week. A 0.25% cut has been priced in by markets, while the chances of a 0.5% cut have now improved to around 25%, up from virtually no chance earlier in the week.
GBP after losing almost 20% of its value since the 2016 Brexit referendum, Britain’s pound continues to be dogged by economic, politic and diplomatic pressures, meaning investors now fear it could be in for another chaotic lurch lower over the summer.
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