Wrong-footed

4 December, 2015

The price action yesterday in the wake of the ECB press conference illustrated the weight of expectations that had built up in the run up and the disappointment of the market in that the combination of measures fell short of expectations. That resulted in the mother of all short squeezes on the single currency, a move that has largely held in place in overnight trading. This largely came from the fact that the ECB did not expand the monthly pace of asset purchases in the QE program which was extended yesterday. But that’s not an easy thing to do given the make-up of asset markets in the Eurozone and the fact that around a third of Eurozone bonds are already trading with negative yields. Elsewhere, there was nothing in the comments from Fed Chair Yellen to put any doubt on the view that the FOMC is set to raise rates later this month.

As if yesterday was not enough, more volatility is likely today with the latest employment report from the US. It would have to be substantially weaker than expectations for a Fed tightening in December to be undermined, perhaps less than 100k on the headline rate. In the bigger picture, the labour market is not the factor that has been holding back the Fed from tightening policy over the past year. So barring a major disappointment, the story for the dollar is now turning to the path of rates in 2016 and we expect that will be the focus later this month when the market digests the Fed meeting statement. Overnight, we’ve seen slightly better than expected retail sales data in Australia provide some marginal support for the still resilient Aussie.


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