USD fell on dovish FOMC minutes, AUD slammed on China tension


USD, FOMC minutes, GBP & AUD trending points

  • USD fell today (February 21st) against most of the majors following another downbeat FOMC minutes
  • US business outlook pulled back towards its lowest level since May, 2016, signaling further fall
  • GBP experienced a relatively dithered day, alongside euro, while both of those currencies appeared to be shackled by political gridlocks
  • Overnight, the Australian Dollar plunged in excess of 1 percent following surprisingly growing geo-political tension between China and Australia, as China banned imports of Australian coals in one of their ports

Dollar fell on dovish fed talk, AUD snapped hard on geo-political worries

The recent streak of USD greenback had taken a tumble following an anticipated dovish-FOMC minutes, while the fall was much softer than expected following growing geo-political tensions in UK, Eurozone and Australia. Following the release of FOMC data, the business outlook had been found foundering to its lowest level since May 2016, which would presumably pave the way for the downswing movement of the American dollar. While this report was being prepared, the American dollar was at 96.09 after falling to a daily low at 95.81 in the early-European trading session.

The Pound sterling had experienced a relatively flatlined day, with an intra-day gain of 0.04 percent to 1.3054, amid a series of mixed Brexit headlines. Although a Brexit deal in the UK House of Common is highly unlikely next week, yet the EU commission seemed to have agreed to allot a few months more to Britain in order to ensure that Britain is leaving with a deal. If Britain leaves without a deal and keeps doing business as usual, eurozone superpowers who are currently probing the possibility of leaving the bloc such as Italy and Spain following their long-run of argument with EU-commission regarding the budget issue, could have taken the bet of leaving the bloc without a deal. Nonetheless, GBP is currently harboring over 1.3050 with potential breakthroughs are unlikely during the rest of the week, yet the pound sterling fate would continue to be whirling along with Brexit headlines.

GBP/USD daily price chart

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GBP/USD daily price chart

EUR/USD daily price chart

EUR/USD daily price chart

Besides, the Australian fell more than 1 percent overnight after China had stated that they had banned imports of Australian coals amid growing bitterness between the two countries. Following the reveal of the news, Australian dollar had fallen against almost all of the majors, while AUD/GBP pair suffered the most, falling over 1.30 percent (235pips) to 1.8446 so far in the intra-day trading. Australian dollar fell 1.16 percent against USD to 0.7079, testing its critical resistance level at 0.7060, and if broken the Australian dollar could again retest below 0.70 region and there are rooms for further dwindling as RBA remained dovish in their latest meeting last week.

AUD/USD daily trading chart

AUD/USD daily trading chart

Bottom Line

Following another downbeat FOMC minutes that said the decision of halting rate hike could pose little threat to the US economy and they would possibly go for one or no interest rate hike this year, US dollar would likely to fall amid a bunch of dented data, fogging out the US dollar outlook in a longer-term.

However, it is expected that the US dollar would be supported continuously throughout this year amid political turbulence in China and a set of important decisions to be made in the Eurozone including a basket of election ahead, in particular the EU election.

Australian dollar could breach below 0.70 level again and there is a grievous possibility of retesting a January, 2016 low below 0.69 level, if the tearing political rugs are not being overhauled soon enough.

Read more on USD trends here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]


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