A man walks past various currency signs, including the dollar (top R), Australian dollar (top L), pound sterling (centre L) and euro (bottom L), outside a brokerage in Tokyo October 28 2014.
A man walks past various currency signs, including the dollar (top R), Australian dollar (top L), pound sterling (centre L) and euro (bottom L), outside a brokerage in Tokyo October 28 2014. A year-long investigation into allegations of collusion and manipulation by global currency traders is set to come to a head on Wednesday, with Britain's financial regulator and six big banks expected to agree a settlement involving around ?1.5 billion ($2.38 billion) in fines. The settlement comes amid a revival of long-dormant volatility on the foreign exchanges, where a steady rise of U.S. dollar this year has depressed oil prices and the currencies of many commodity exporters such as Russia's rouble, Brazil's real and Nigeria's naira - setting the scene for more turbulence on world financial markets in 2015. Picture taken October 28, 2014. Reuters/Yuya Shino

Bell FX Currency Outlook: The Australian Dollar is higher after the release of the US Federal Reserve’s January policy meeting minutes.

Australia: The AUD is trading slightly above USD 0.7800 this morning after the Federal Reserve indicated it does not appear to be ready to start raising interest rates, with officials expressing concerns about inflation and lingering problems in the labour market. The USD has held up relatively well considering the slightly disappointing industrial production numbers and the Fed minutes, in which many officials argued for keeping rates near record lows for longer. The testimony from Chairperson Yellen next week will now be critical for the USD. If she remains dovish then the USD is at risk of a more significant test lower. In the aftermath of the FOMC minutes the markets will be adrift, with little new data released. ANZ Consumer Confidence and Job Ads will drive the NZD this morning, with EUR attention on the inaugural ECB minutes. Domestic interest rates are likely to follow the move lower in US yields this morning following the relatively dovish FOMC Minutes. Weak fundamentals in crude oil markets are likely to create further headwinds. The magnitude of the pick-up in demand post the CNY holidays will be the key determinant of iron ore price recovery. Another quiet day in Australia with no data of note released.

Majors: As stated above, the minutes from the January FOMC meeting were more dovish than expected although we do not expect there has been a wholesale change in view. The FOMC appears more concerned about risks from offshore and the higher USD and many FOMC members would prefer to keep the fed funds rate at near zero for a “longer” time (most of the market is not reading too much into the term “longer”. In addition, given many of the offshore issues, such as the Greek and Ukraine situations, are appearing to be getting closer to a resolution, and this will assist some geo-political uncertainty that has plagued markets for quite some time. Basically, the markets still believe that the first hike will occur in the US around mid-year, although it must be we acknowledged the risks of the Fed holding off have no doubt firmed. Yellen’s speeches next week will be important. Good luck today.

Economic Calendar 19 FEB

  • CH Chinese New Year
  • JN Trade Balance Jan
  • EU Consumer Confidence Feb
  • US Philadelphia Fed Manufacturing Survey Feb

[Kick off your trading day with our newsletter]
More from IBT Markets:
Follow us on Facebook
Follow us on Twitter
Subscribe to get this delivered to your inbox daily