Key currency pair after Fed: USDJPY and AUDUSD – TDS

By FXStreet FXStreet (Delhi) – Research Team at TDS, suggest that after the next week’s Fed decision, USDJPY and AUDUSD are going to be the key currency pair to trade in with maximum volatility.

Key Quotes

“Our base case view is for the Fed to take a rain check on a hike until early next year but for investors that have more confidence and a higher risk tolerance, there are two pairs that we think will be key to watch.”

“Generally speaking, we strongly favour USDJPY as our vehicle of choice on events where underlying risk is a change to the US monetary policy trajectory, such as NFP or the Fed. This time is no different.”

“Subjectively however, we think there will be asymmetries in the market and USDJPY may be more responsive to a net-hawkish outcome than a more dovish one. This is because the recent volatility has gone a long way in clearing some of the overhang of stale long USDJPY positions.”

“At the same time, we think AUDUSD may also display an asymmetric response to the Fed but in the opposite manner. With net shorts running at 28.1% of total open interest, we think a dovish outcome may benefit commodity-linked currencies disproportionately.”
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Source:: FX Street