Risk assets are being buoyed further by hungry investors happy to get back into equities as the outlook for monetary policy tightening looks more assured with rates set to stay lower for longer. The FOMC minutes were decidedly dovish with the Fed continuing to stress its concern in respect to risks from overseas and the impact this is having on global growth and US domestic inflation. This is increasing risk appetite giving renewed strength to the Aussie which overnight has broken to a new six week high against the dollar having pressed against the 0.7300 level already this morning.
As we continue to move into the final quarter of 2015 the odds on there being a December rate hike from the Fed have significantly reduced. Our Chief Economist has been consistent in his call for no Fed hike this year as far back as 2014 (read here) and as the past couple of years have proved, whilst it is incredibly difficult to predict Central Bank monetary policy, we are looking for the first Fed hike to come in March 2016. Today’s economic calendar is quiet although Canadian unemployment data is released at 13.30 UK time to keep an eye out for USDCAD to see if further dollar weakness is on the cards.