Dollar Stabilisation Expected Amid Hawkish Rate Hike Bets
The week has started with a sharp decline in stocks, gold, silver, and Bitcoin, but crude oil rebounded. The markets were left disappointed by Trump's refusal to agree to Tehran's proposal to re-open the Strait of Hormuz, although there is still hope for progress after reports that mediators will hold talks on an amended version of the 7-day proposal.
The focus will also turn to economic data this week, with upside surprises in jobs data potentially leading to cemented rate hike expectations for the October FOMC meeting. However, after the sharp dollar rally, a stabilisation in major FX pairs is expected in the coming days.
The AUD/USD pair is one to watch as it trades around its 200-day average. A hawkish hike by the RBA on Tuesday should keep the longer-term bullish AUD/USD forecast intact.