The Aussie dollar has rallied hard over the past 24 hours after a weaker US dollar and the big jump in employment yesterday combined to take it up to a high of 0.7820 earlier this morning.
Along with the Euro, Canadian dollar and others, the Aussie dollar was looking strong. At least that was the case until Stanley Fischer started talking to Sara Eisen on CNBC this morning.
Asked by CNBC’s Sara Eisen if the data slowdown was temporary and whether he expected a rebound Fischer said “there is definitely a rebound underway already, we have to see at what speed it proceeds.”
But the really big comment, and the one that Forex traders seem to have latched onto was his dismissal of Q1 weakness as “seasonal.”
The first quarter was “poor” but the economy is still looking strong Fischer said. He highlighted that Q1 weakness “seems to be a new seasonal pattern, it’s been that way for about 4 of the last 5 years.”
Last year we had negative growth in the first quarter and then spectacular growth which made up for that and we don’t know what going to happen in the second quarter here yet.
That may sound innocuous but traders took note because Fischer is saying the Fed is already looking through the current weak economic data to an expected rebound in the months ahead.
Fichser reinforced that late in the interview saying the Fed knows the markets “look ahead somewhat, so I think—I hope—that they are taking into account that the Fed, at some point, is likely to raise the interest rate.”
On timing, he said markets “can’t depend on the current situation continuing forever—or even probably—beyond the end of this year.”
That means rates in the US are going to rise and that helps the US dollar.
It also stopped the Aussie dollar in its tracks.
You can watch the interview at CNBC here
Business Insider Emails & Alerts
Site highlights each day to your inbox.