With no U.S. economic reports released today and relatively benign comments from Fed Presidents Williams and Dudley, yields are the only explanation for the dollar’s moves. On the basis of North Korean risks, profit taking and technicals, USD/JPY appears poised for a move down .
While there may not be much on the U.S. calendar, the Australian and New Zealand dollars will be in play this week with dual announcements on the calendar. Between the two, the RBA rate decision should be less market moving than the RBNZ because the Australians have maintained a neutral policy stance for many months and is expected to continue to do so.
Although retail sales stabilized after falling in September, zero growth in demand means spending is weak. Labor market activity and the annualized pace of has also deteriorated on the back of softer manufacturing, service and construction sector activity, giving the RBA very little reason to alter their bias. The good news is that consumer and business confidence is up and the currency is down. But In the context of rising U.S. rates, the RBA doesn’t need to be all that cautious for AUD/USD to fall yet given how much it has declined over the past 2 months , a tinge of optimism would send AUD/USD towards higher quickly.