Dollar Finds a Footing, RBA Minutes Up Next

The dollar bleeding stopped in US trading and it made a roughly 50-pip recovery against most currencies. On the day, the Australian dollar was the best performer while the US dollar lagged.  

Larry Summers pulling out of the Fed race continued to dominate and the market began to search for other realistic candidates. Yellen is the overwhelming favorite now but Donald Kohn has emerged as the top challenger. Kohn was the vice president of the Fed until 2010 when he retired. The White House says it will announce a nominee 'in the Fall' which leaves a short timeline if they want to float another name.

The market pushed the dollar to session extremes at the start of US trading but the anti-dollar sentiment quickly ebbed.  Cable touched 1.5963 but traders probably looked at the upcoming calendar and the FOMC decision on Wednesday and decided it wasn't a good time to push it.

Most dollar pairs have re-entered the opening gaps now and that's generally a technical signal for recovery but dollar bulls have been repeatedly burned in the past month.

The calendar didn't provide much impetus: the Empire Fed was at 6.3 compared to 9.2 expected and industrial production was in-line with the +0.4% forecast.

Up next are the minutes of the RBA meeting at 0130 GMT. The consensus is that the easing cycle is over for now and we will look for clues to confirm. AUD bears are weak at the moment and AUD/USD could find it easy to rally on any positive headlines.