Central Bankers under investors radar

21 August, 2017

Less than a month ago the CBOE volatility index, known as the best indicator of fear in the markets, dropped to a record low of below 9. The declines were a result of steady equity markets, low trading volumes, and optimism that the markets were heading higher. ВВ This has all changed in the past two weeks- the fear index rallied from a low of 9.52 to 17.28, an 81% spike in 4 days from Aug 8 to Aug 11. This was precipitated by rising tensions between the U.S. and North Korea. These tensions lasted for a couple of days, then eased after both sides backed down. However the calm didn’t last long, as President Trumps’ response to the Charlottesville clash, saw business leaders exiting his advisory councils, and a number of high profile Republicans criticizing and distancing themselves from the President.

The departure of Trump’s Chief Strategist Steve Bannon, mainly seen as pushing protectionist policies, was not unexpected and it was slightly positive for markets, causing U.S. stocks to rally on Friday, but the market ended near lows.

Politics have clearly taken the front seat, and another shock will likely lead to a further selloff in equities. Some investors might see the recent fall in prices as an opportunity to buy the dips, but given that valuations are still very high compared to historical averages, many will hold off until seeing meaningful fiscal policy change. Trump’s administration will be tested as we get closer to hitting the U.S. debt ceiling. According to the Congressional Budget Office, the debt limit should be raised by mid-October, to avoid defaulting on loan payments, but this time it doesn’t seem a done deal.

Given that the economic calendar doesn’t hold tier-one data this week, investors and traders will be focusing on the Jackson Hole central bank gathering on 24-26 August. The two stars of the gathering will undoubtedly be Mario Draghi and Janet Yellen. The most recent minutes from the Fed and ECB, shows that inflationary pressures remained absent, despite declining unemployment. When looking at bond yields across the globe, investors seem to be convinced that inflation isn’t returning anytime soon. However, financial asset prices are worrying central bankers, especially the Fed, which sees valuations as elevated.

With ECB’s meeting scheduled on September 7, Euro traders are waiting for signs from President Draghi as to when the central bank will start trimming QE. The single currency managed to overlook ECB’s minutes, which revealed that Euro strength is becoming a concern for monetary policy makers. If Draghi does not disclose his plan for tapering QE, the Euro might fall towards 1.16, but I would prefer buying the dips then selling the rallies, as the ECB have no other choice but to tighten policy.


Source link  
Yuan firms on Dollar weakness

Global investors will likely remain on high alert throughout the end of the week to see if the largest market sell-off since early 2018 will...

EM currency weakness refuses to go away

Tuesday has seen stability in Chinese markets following a very nervous beginning to the new trading week yesterday. Signs of China market stability...

Yuan eases on risk-off sentiment

Financial markets have entered the new trading week on negative footing as a mixture of different market themes weigh on investor sentiment...


Risk assets under pressure from rates

Chinese equities took a big hit after traders returned from a week-long holiday. Efforts by the People's Bank of China to free more than $100 billion...

U.S. Treasury Yields boost the greenback

The U.S. Treasury selloff on Wednesday was the biggest story in the financial markets. This time it wasn't only the rate-sensitive two-year yields that marched higher...

NAFTA deal fails to lift global risk appetite

Global investors remained defensive on Tuesday despite the U.S. and Canada agreeing to a new trade deal ending months of uncertainty...


Dollar steady after Fed raises rates

In a widely expected move, the Federal Reserve has raised its key interest rate by 25 basis points for the third time this year. The central bank...

Markets prepare for Fed meeting

The resumption in concerns around trade uncertainties, the upcoming Federal Reserve policy meeting and general political risk element that...

Could the Dollar be turning the corner?

Currencies throughout Asia have welcomed the news that the Dollar has tumbled to a near 3-month low. A number of different currencies in the...


In the past 24 hours Bitcoin has lost -0.84% and reached $6527.11401215. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.6352% and is now at $1.1587. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -6.99% and is now at $206.211271948. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Forex Market Analysis



Forex Currencies Forecasts



Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets91%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9FXCMFXCM80%
10AvaTradeAvaTrade77%
  


Share: