U.S. dollar on the defensive

September 14, 2016

Global equity markets received a boost on Tuesday after remarks from Fed governor Lael Brainard lowered the odds of an imminent rate hike when the Federal Reserve meets next week. Markets were anxiously awaiting Brainards’ comments to see whether recent economic data were was sufficient to turn one of the most dovish members into a hawk, but she made it clear that there are a’s number of factors to be taken into consideration before pulling the trigger on hiking rates such as the absence of accelerating inflationary pressures and risk from abroad.

Fed officials who were trying so hard to prepare markets for tightening monetary policy as early as September are now being ignored, as future traders are pricing in just a 15% chance for a hike in September down from 28% before Ms. Brainard spoke.

Although delaying a rate hike might continue to provide some artificial support to equity markets I still believe that valuations are high and aren’t supported by economic fundamentals or corporate earnings. When looking at last Friday’s price action, all major U.S. indices dropped by more than 2%., Wwhile gold and U.S. 2-years treasury bonds, which are supposed to be more sensitive asset classes to changes in monetary policy, just fell slightly. This indicates that we are likely to enter a phase of sharp volatility heading into fourth quarter, with risks tilted to the downside.ВВ 

The greenback traded slightly lower against most of its major peers on Monday but remained in a relatively tight range today. Today’s UK inflation data is likely to provide some price action on the pound with August CPI expected to reach its highest level since December 2014 at 0.7%. But the more interesting release this time is from PPI’s input prices which is forecasted to show a huge spike of 8.1% in August compared to 4.3% in July, making the case harder for BoE to continue loosening monetary policy when the central bank meets on Thursday.

Publication source
FXTM information  FXTM reviews

December 7, 2016
Will ECB support Italy?
The yield of the Italian sovereign debt fell on Tuesday as the focus moved to the political uncertainty on the market. After Renzi’s crash on the weekend and the expectations of the ECB measures to deal with the possible fallout of the financial markets...
December 7, 2016
WTI bears on the prowl
WTI Crude was vulnerable to sharp losses on Tuesday following reports of OPEC output rising to a worrying record high of 34.19 million barrels per day in November which revived the oversupply concerns
December 7, 2016
CAD claws back ground
The Canadian dollar has finally managed to gain some ground against the strong USD after weeks of the market waiting for it to react to oil prices beginning to show some turn after the recent OPEC agreements...

OANDA Rating
Trade360 Rating
Z.com Trade Rating
HYCM Rating
XTB Rating
Orbex Rating

Porter Finance Rating
Binary Brokerz Rating
365BinaryOption Rating
Empire Option Rating
Beeoptions Rating
Banc De Binary Rating