Fed fighting

13 September, 2016

Friday proved to be a rather uncomfortable end to the week for most markets, with increased nervousness regarding Fed policy resulting in losses in equities, a sell-off in bonds and a sharp increase in implied volatility in both equities and also FX. Once again, there appears to be a fight in play, between a Fed keen to raise interest rates and a market far more sceptical of it happening. Currently, the market places a 30% probability of the Fed putting up rates next week. Today sees the final speech from a Fed official before the meeting, with Brainard due to speak early during the European meeting. Traditionally, she’s perceived to be on the dovish side, but there is some thinking among Fed watchers that she could be used to shift market thinking more towards a tightening. So there are volatility risks on the dollar later today.

For now, the dollar is starting the week on a slightly softer footing and more so against the yen, with talk in some quarters of the BoJ moving away from ‘shock tactics’ of the past. Equities followed through on the Friday session’s weakness during the Asia session, with that also being reflected during the European session. We’re likely to be in a waiting game ahead of the Fed speech later today, with nothing major on the data calendar to provide a distraction before Brainard’s speech at 17:15 GMT.


Source link  
Divergence Between Fed and BoJ

The March FOMC meeting will be held for two consecutive days from today. The interest rate decision will be announced at 18:00 GMT on Wednesday 15th March...

Market Volatility Expected Ahead of President Trump's Speech

In a speech that will be watched by millions of viewers in the United States and around the world, the President is expected to speak of his presidency and address pressing issues like his plans for health care, the tax system, the military, and his goals for his administration...

Gold Trades Below Resistance Ahead of the Fed and NFP

We will see the release of the US ISM Manufacturing PMI, and ISM Prices Paid for January, at 15:00 GMT on Wednesday 1st February...


Sterling Struggles Ahead of Theresa May's Speech

Theresa May will make a speech outlining her plans for Brexit tomorrow, Tuesday 17th Jan, before the UK triggers Article 50 to leave the EU...

Dollar Turn-around on Trump's Press Conference

President Elect Trump's first press conference after his victory in the US presidential election, was held yesterday around at 16:00 GMT. It has caused great volatility to the dollar and the markets...

Gold Nears Major Resistance Ahead of Trump’s Press Conference

Gold prices have rebounded since mid-Dec after testing the significant support line at 1120. On the 4 hourly chart, gold bullish momentum has been strengthened since the beginning of this year, helped by the dollar retracement...


Searching for a new narrative

Popcorn at the read today as President elect Trump has a scheduled news conference later in the day (around 16:00 GMT). Markets have become used to listening to him in 140 characters or less over the recent weeks, so a more elongated narrative should be welcome...

The sterling conundrum

Yesterday's early weakness in sterling, on the back of the latest comments from PM May surrounding Brexit, took cable close to key support levels and the resilience seen through most of the post US election period has been unwound...

Selling into USD strength

In summary, Friday US jobs report was pretty much in line with expectations, although the slightly better data on earnings gave some support to the dollar into the end of the week. As a result, the US currency was little changed from Tuesday opening levels...

  


Share: