This week has been a USD week. Dollar has been the best performing currency against all major currencies as well as against the emerging market currencies. Traders have been holding the USD because of strong anticipation for a rate hike before the end of 2015. This has put a lot of downside pressure on commodities and commodity currencies.
The Chinese PMI figures was released earlier in the week, the figure shows that Chinese economy is still relatively slowing down because of the disappointing figures that came below expectation (47.0). This has weighed down on the prices of commodities as well as commodity currencies. AUDUSD traded as low as 0.69 dropping from 0.71. Gold also dropped from $1141 to $1120.
The Japanese Prime Minister Shinzo Abe gave some insight into Abenomics. He made some adjustment in the economic policy of japan and the outlook. He planned to continue with sales tax increase and he also highlighted 3 new cardinals of Abenomics: strong economy, social welfare and child care.
The Federal Reserve chairman Janet Yellen, in a press conference highlighted the fact that the FED is likely to raise rate before the end of 2015. She said if they don’t act now, they might have to tighten abruptly. She also mentioned that factors keeping inflation low are temporary.