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  
Markets take a U-turn after disappointing

After a positive start to the week, Asian equities fell today amid rising concerns over the global economic outlook. The market is currently being...

EM currencies mixed despite optimism

The mood across financial markets was mixed this week as investors tussled with Brexit drama, US-China trade developments and a partial...

China stimulus extends correction

A solid kick off for the U.S. earnings season, Theresa May surviving a vote of no-confidence, China's central bank pumping record liquidity, and policymaker assurances...


Rally losing momentum

Investors have kicked off 2019 in a positive mindset. The S&P 500 rallied during 5 out of the past 6 trading days booking 3.1% gains so far...

Equities recover on trade optimism

After a terrible end to 2018 which saw global equities plummet, markets are finally seeing the color green returning to their screens. U.S. stocks built...

Optimism creates illusion of stability

The first trading week of 2019 has been explosively volatile and highly unpredictable due to persistent concerns over slowing global economic growth...


Stock markets resume rollercoaster ride

The final trading week of 2018 has been explosively volatile and wildly unpredictable due to geopolitical risks. Global sentiment repeatedly...

Risk-off sentiment intensifies

It has been a painfully bearish trading week for global equity markets as fears over slowing global growth weighed heavily on investor sentiment.

Dollar rebounds after Fed rate hike

In a widely expected move, the Federal Reserve has raised its key interest rates by 25 basis points for the fourth time this year. However, the central...


In the past 24 hours Bitcoin has gained 0.85% and reached $3604.49774085. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 1.5351% and is now at $1.1563. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -4.35% and is now at $118.472353157. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Forex Market Analysis



Forex Currencies Forecasts



Top 10 Forex Brokers 2019

# Broker Review
1easyMarketseasyMarkets91%
2FXTMFXTM87%
3HYCMHYCM86%
4FxProFxPro84%
5FIBO GroupFIBO Group83%
6OctaFXOctaFX82%
7HotForexHotForex81%
8FXCMFXCM80%
9XMXM72%
10FP MarketsFP Markets69%
  


Share: