The Australian dollar’s implied volatility may rise along with that for the euro and New Zealand’s kiwi because the Federal Reserve’s interest-rate guidance lacked clarity, Commonwealth Bank of Australia said.
The dollar fell versus its major peers for the first time in four days, paring a weekly gain, as investors weighed prospects for U.S. economic growth against signals the Federal Reserve will raise interest rates next year.
The dollar was set for its biggest weekly advance in two months versus major peers before Dallas Federal Reserve President Richard Fisher speaks today amid prospects the central bank will pare stimulus.
The Australian dollar headed for a weekly drop versus currencies of the U.S. and Japan on concern China’s economy is slowing and before Crimea votes this weekend on whether to leave Ukraine to join Russia.
Traders who placed record bets against the Australian dollar are ruing their timing, after the central bank signaled two years of interest-rate cuts are at an end and stepped back from efforts to talk down the currency.
The euro retreated from an eight- month high versus the dollar before the European Central Bank meets today for the first time since President Mario Draghi said he’s ready to inject cash into the banking system.
The yen slid versus all its major counterparts as Asian stocks rose and the extra yield investors receive from U.S. securities climbed to the most in four months, damping the allure of Japan’s currency.
The dollar fell versus the euro and the yen after Federal Reserve Chairman Ben S. Bernanke said the central bank’s main interest rate will probably remain near zero for a “considerable time” after asset purchases end.