Dollar shake out

19 March, 2015

Dollar bulls were squeezed last night as we saw some dramatic moves in FX markets with the dollar plunging after the Fed lowered its inflation and growth forecasts last night. There was every likelihood of there being a spike in volatility during and after the FOMC decision which we warned about yesterday, as well as being consistent in saying any rate hike is likely to come later than many were anticipating. As expected the word “patience” was removed and traders were caught off guard as the dollar headed lower rather than higher as Yellen clarified this did not mean inflation normalising anytime soon. The move was significant across all the majors with GBPUSD getting back above 1.5000, EURUSD exceeding 1.1000 and USDJPY touching 119.30 at its lowest, which would have triggered many stops and therefore exacerbating the moves. The initial reaction has been largely reversed overnight, although the plunge in US Treasury yields has barely see any recuperation of their losses, so doubtless to say the Fed continues to play a waiting game. They want to see a more sustainable improvement in the labour market, in particular on the wage growth front and signs that disinflation pressures are subsiding.

Now the Fed meeting is out of the way and we know the first rate hike will come later in the year, focus will revert back on the single currency as negotiations continue between Greece and its creditors in its quest to secure more funding and avert a Grexit.


Source link  
Market Sentiment Hinging On Progress In Brexit

The British parliament will vote on the Brexit agreement today at 18:00 GMT. In theory, this should be a simple vote, with a definite...

Market shows demand for yielding assets

The market shows demand for yielding assets, which in turn supports demand for the stocks and currencies of emerging markets. The main...

Yuan and Dollar as a weapon in trade wars

The US Nonfarm Payrolls on Friday could even be called boring: the report showed the preservation of a completely healthy labour market...


Disappointment with Fed and tariffs

Trump announced 10% tariffs on Chinese goods worth $300 billion since September 1, thus ending the US-China trade truce after disappointingly...

Fed pushes down stocks

Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed...

Gold updates new 6-years highs

Gold benefits from a combination of two factors: lower interest rates in debt markets and continuing hopes that the global economy...


Markets recede from the recent highs

A strong Nonfarm Payrolls caused pressure on the stock markets, reducing the chances of the interest rates lowering by the Fed in the upcoming months...

Gold resumes rally, pushing past $1400

Gold prices resumed a push higher on Monday, as flows into the precious metal continued on improved prospects for easier monetary policy from...

Gold rises as markets slip

Market caution continues to support gold. Quotes of this metal rose to $1337, repeatedly trying to push above this year highs at the 1340-1360 area...

  


Share it on:   or