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  
U.S. Government Shuts Down

The U.S. government shutdown over the weekend as the Senate failed to pass a bill to keep the funds flowing late on Friday. The Democrats are making...

USD Index Retesting Significant Lows

The Economic calendar for today is very light, with main events in focus for the European trading session concentrating around German PPI...

Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...


US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...

CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...


No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...

No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

  


Share: