Markets defy convention

13 February, 2015

The recent moves in FX markets have caught many people off guard. Perhaps not to the extent of the SNB floor removal a month ago, but the dollar strength of last year and the first part of January has come to a grinding halt. Despite the Bank of England at their quarterly Inflation Report saying that there is room to ease monetary policy further, GBPUSD rallied as growth forecasts for next year were readjusted higher. The market had become too bearish of sterling considering the growth prospects are much better than many other developed economies and recent sentiment data shows that the UK economy remains in good shape. There are now a growing number of calls expecting the BOE to hike rates before 2016. At the time of writing Cable sits above 1.5400 and with a bit of momentum behind it a test of previous support around the 1.5500 area should not be ruled out, which is the major near term resistance level for sterling vs the dollar.

The euro is the other currency defying many bears with EURUSD stubbornly recovering back above the 1.1400 level, assisted by better than expected German GDP data this morning. This is a well shorted trade and has been subject to a correction to the upside for some time, but risks surrounding Greece remain a limiter to any major move to the upside.

Another stand out move is Brent crude recovering back above $60 on the back of a weaker dollar and the prospect of spending cuts having a knock effect for production. Many are arguing that since crude prices have rallied over 20% from their lows (over 30% in fact), oil is technically back in a bull market.


Source link  
USD Bounces From Month Low

Trump administration has presented its 2018 budget plan to Congress last evening. The budget plan calls to slash $3.6 trillion...

Dollar index hit a new low

The dollar index hit a new post presidential election low of 96.95 on Friday May 19th. EUR/USD hit a high of 1.1211...

USD Hit Post Election Low

To date the dollar index has almost given up all of the post presidential election rally...


BoE Expected to Keep Rates Steady

ECB Governor Draghi will make a speech in the Dutch Parliament at 12:00 BST today. It will be Draghi first speech...

Trump's Tax Reform Plan

US Treasury Secretary Mnuchin announced Trump’s tax reform plan in a press conference...

Corporate Earnings Lift US Stocks

Last week the US President Trump stated on twitter...


Market Concerns Eased

The first-round voting of the French presidential election was revealed on Sunday night...

Dollar Plunged on Trump Second Statement

The dollar index fell to a 2-week low of 99.91 in the early hours...

Markets Eye on the First Trump-Xi Meeting

US President Trump and Chinese president Xi Jinping, are scheduled to meet today at Trump’s Mar-a-Lago resort in Florida...

  


Share: