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27 Aug 2015
'Risk on' back in vogue: US Dollar, Aussie benefit
FXStreet (Bali) - Risk appetite is back in vogue during the early going of the European session, with regional equities and the S&P 500 futures solidly on the green, boosted not just by tracking Wednesday's Wall Street gains, but also by a vigorous bounce in the Shanghai Composite ending at 3,083, +5.3% on day.
AUD best performer, USD quite a distance behind
As per the best performing currencies so far in European trading, flows have been supportive of the Australian Dollar, underpinned by a better-than-expected third 2015/2016 capex estimates in Australia - despite a horrible backward looking Q2 reading - , and to a lesser extent the US Dollar, benefited by the current 'risk-on' environment. The Euro and the Yen, as one would expect if following recent market dynamics, have been sold-off quite aggressively, especially the latter.
USD is a 'risk-on' currency courtesy of the Fed
With regards to the US Dollar, traders continue to counter-intuitively bid the world's reserve currency in risk-appetite times, with a new paradigm of sorts unfolding, by which 'risk-on' swings are perceived as Fed closer to tighten, while 'risk-off'is seen as reduced odds of a Fed rate hike. An expected upward revision to Q2 US GDP later today, has further fueled the bid tone.
AUD best performer, USD quite a distance behind
As per the best performing currencies so far in European trading, flows have been supportive of the Australian Dollar, underpinned by a better-than-expected third 2015/2016 capex estimates in Australia - despite a horrible backward looking Q2 reading - , and to a lesser extent the US Dollar, benefited by the current 'risk-on' environment. The Euro and the Yen, as one would expect if following recent market dynamics, have been sold-off quite aggressively, especially the latter.
USD is a 'risk-on' currency courtesy of the Fed
With regards to the US Dollar, traders continue to counter-intuitively bid the world's reserve currency in risk-appetite times, with a new paradigm of sorts unfolding, by which 'risk-on' swings are perceived as Fed closer to tighten, while 'risk-off'is seen as reduced odds of a Fed rate hike. An expected upward revision to Q2 US GDP later today, has further fueled the bid tone.