That deja vu feeling

7 September, 2016

There is a strong feeling that we’ve been here before, exactly 12 months before to be exact. Markets got themselves into a frenzy that the Fed will hike in September, with Fed officials not standing in the way, only for the data to scupper things. Of course, we’re not there yet, with the decision not until 21st September. That said, yesterday’s weaker than expected services ISM data has dented expectations for a further move, the dollar falling 0.8% on the dollar index as a result. The chances of a hike by year end, as priced by interest rate futures, is now only around 50%, so the scope for further dollar volatility ahead remains strong as expectations change.

Overnight, we’ve seen the Aussie marginally weaker after the latest GDP data slightly undershot expectations, rising 0.5% MoM. Still, this is 100 quarters without a recession, with the headline 3.3% gain an enviable figure for most of the developed world. The Aussie consolidated after yesterday’s gains, both on Aussie strength and dollar weakness.

Today’s main excitement could well come from the appearance of BoE governor Mark Carney in front of the UK Treasury Select Committee, with other members of the MPC. No doubt there will be some robust exchanges, given that some MPs may feel the Bank over-reacted, both in its warnings before the Brexit vote and also in the subsequent response. Sentiment data has largely re-bounded and other data are not showing a dramatic impact on the economy as yet. Sterling has performed well over the past week, in part because longer-term short positions are being squeezed out of the market in response to data surpassing expectations. EURGBP has seen some reversal in early trading after what has been 8 straight days of declines, with yesterday’s low of 0.83338 marking the initial support level for today.


Source link  
Markets listen to Yellen & Draghi

Central Banks are the key drivers of the markets this week as traders focused on comments made from two major central bankers ECB and Fed...

Markets look ahead to US data

Trading in USD was relatively flat on Friday ahead of economic indicators released next week in the US, which will provide...

Bear Territory for Oil?

Oil continued to trade lower on Thursday as traders look ready to test new lows for crude prices with worries persisting over a global glut...


USD Rises as Investor Concerns Abated

Investor concerns, that low US inflation could deter the Federal Reserve from raising interest rates further this year...

How will FOMC Affect USD?

The crucial US retail sales and inflation figures for May will be released at 13:30 BST today...

Different Election Outcomes

In terms of the UK general election, there are 650 seats in total in the House of Commons. To become a majorityþ..


Seats Forecasts Weigh on GBP

Per the latest poll of polls released yesterday May 31, conducted by the Press Association based on...

Could USD Rebound?

The FOMC released its May meeting minutes last evening stating that the overall economic assessment was little changed...

Eyes on US Retail Sales

Friday May 12th will see the release of a set of crucial US data for April at 13:30 BST; retail sales, retail sales excluding autos, CPI and core CPI....

  


Share: