Searching for a spark

The market has been searching for a spark this morning. No doubt dealers are suffering a mild case of  Central Bank fatigue as the market remains in flux digesting last week’s  “hawkish Fed hike “ amongst other central bank hawkish surprises. I suspect the dollar will be susceptible in both directions given that the impact of soft US economic data persists while clashing with an overly hawkish Janet Yellen

 

The greenback is mirroring US rates indicating room for risk to evolve as weak US economic data will raise a red flag about Fed policy normalisation running ahead of the curve. However given the light US economic calendar this week, Fedspeak will be far more entertaining with Dudley on Monday and Fischer on Tuesday likely to attract the most attention. The risk for the dollar would be for the Fed members to reign in some of the hawkishness from Dr Yellen.

 

But I suspect the European political narrative will remain in focus as Brexit negotiations will commence later today, mind you with much difficulty for UK negotiators given the weaker hand the Tories have been dealt post-election. How these negotiations evolve will likely hold the near term fate for the Pound

 

Local market awaits the MSCI decision on the China A Index.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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