Replacing the dollar narrative

9 May, 2016

Friday’s US employment report failed to offer much in the way of resolving the current state of flux in FX markets. Expectations of further divergent monetary policy are not proving to be either a strong or reliable driver of currency markets. But as yet, there has not been a strong alternative narrative to replace it. Interest rate markets are still not convinced that we will see a further rate increase this year from the US Federal Reserve and currently we’d have to see a very strong pick-up in both activity and prices data for a move to be seen before the depths of the summer. Even the Brexit story on sterling has fallen by the wayside as a dominant driver of the currency, leaving sterling without a defining force going into the June referendum. This is despite the fact that the polls still continue to give only a slim advantage to the ‘remain’ campaign. That said, as we head into the last 6 weeks of campaigning we could well see this change as campaigning gears up.

UK PM Cameron is speaking this morning and sterling is weaker as we start the European session, back below the 1.44 level. Elsewhere, after the dollar’s recovery last week, we are seeing the commodity currencies as the weakest performers over this period, with naturally the Aussie leading the charger lower after the rate cut. The scope for lower rates remains for both the kiwi and Canadian dollar, so weakness could well persist for some time to come. Elsewhere, the data calendar is on the light side for today, whilst equities have managed a positive start to the session, despite the weakness seen in China.


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: