History repeating itself

6 June, 2016

The US employment report pretty much knocked the chance of a June FOMC rate hike out of the field. As I suggested last month, June has turned out to be September of last year, where the Fed laid the groundwork for a rate increase, only to be undermined by the underlying economy. Of course, it’s not a done deal yet, but the probability of a hike this month has fallen from around 25% to below 5% on the back of the jobs data. The dollar naturally retrenched, with losses most pronounced against the South African Rand, Brazilian Real and the single currency. The only currency that finds itself weaker against the dollar is the British pound, which fell at the start of Asia trade as the latest EU referendum poll (released Friday) showed gains for those supporting an exit. Cable finds itself one big figure lower as a result, currently flirting with the 1.44 level.

Against this backdrop, the speech by Fed Chair Yellen later today will be the main event pre-occupying markets. The emphasis is likely to remain on the data dependence of any future rate moves, but naturally markets will be sensitive to any hints around the summer (most notably July). Yellen aside, the data calendar remains on the light side today, so majors are likely to be trading relatively cautiously ahead of the 16:30 GMT speech. The equity reaction to Friday’s data was very telling, the market struggling to get excited about the continuation of low rates, instead focusing on the weaker economy. This is another sign that monetary policy is losing its impact on markets.


Source link  
All Eyes on Central Banks

Markets were, for the most part, little changed on Wednesday as traders waited for today’s Bank of Japan and ECB rate decisions. Earlier today...

Dollar Bears

UK Consumer Price Index (CPI) data was released on Tuesday showing inflation easing for the first time in nearly 10 months, retreating from the near 4-year high touched in May...

More Record Highs for Equities?

Early indications from Asia this morning are pointing towards a strong day for global equities, continuing the momentum from last week...


US Data brings on USD bulls

U.S. job growth surged more than expected in June and employers increased hours for workers, with signs of a labor market strengthening that is likely...

Biggest Quarterly Drop in 7 Years

USD recovered marginally on Friday, but had its biggest quarterly decline against several currencies in nearly 7 years following hawkish signals...

Markets look to Central Bankers

Asian Equities traded higher on Tuesday approaching near two-year highs on Tuesday as USD strength helped exporters...


Global Economic Optimism Continues

Global equities moved higher on Monday as optimism continued to improve on global economic growth. However, USD...

BOJ Monetary Policy Remains Steady

The Bank of Japan maintained their monetary policy on Friday whilst upgrading their assessment of private consumption...

Final Confirmation for a June Rate Hike

The crucial US labour market data for May will be released today, June 2nd at 13:30 BST. It includes non-farm payrolls...

  


Share: