FED minutes could be driving force for exchange rates this week (Mike Vaughan)

AUDGBP Tests 0.5600 Once More as BoE Cuts QE

Sterling exchange rates have rallied to just shy of 1.72 today but ths weeks market trends could be dominated by risk strategies following the FED minutes due for release at 18:00 BST on Wednesday. With the FED adopting a ‘will they wont they’ approach to the ‘tapering’ of QE these minutes may well provided clues as to the future monetary policies the FED will have in store. Any discussion on ‘tapering’ and this could lead to strong gains for the USD and a possible shift against the ‘risk’ currencies, notably the AUD, NZD and ZAR. This could provide further opportunities for buyers of the Aussie later this week.

Also any AUD buyers or sellers should watch out for the RBA minutes scheduled overnight. The minutes are likely to hint that the RBA will keep interest rates on hold for the time being following a round of rate cuts earlier this month – this could lend support to the Aussie overnight and tomorrow, a possible short term opportunity for AUD sellers.

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