A world of confusion .

Another stellar volume day in the Forex world with clear and distinct market drivers leading the way. After 24 hours to digest the FOMC minutes smart money suggest one more rate hike in 2017 but the tail risk given the markets disparate US economic view is a softer outlook as the market continues to lean against the Federal Reserve Hawkish convictions given the downcast inflation outlook.

As for the Greenback, the key to any sustainable USD recovery is down to the yield curve and more precisely a faster and steeper tightening cycle.

The first Friday of the month brings in the granddaddy of all economic indicators, US Non-Farm payrolls. The markets will look past the headline print and focus on the wage growth component given the Feds” It’s all about inflation mandate.“
The ECB minutes were viewed minimally hawkish, but the EUR resurgence was driven off the back of fixed income moves with the market seeing the Feds to hike just one more time in 2017 while l the ECB looks to taper and perhaps even more aggressively than the current view.With that in mind, German bund yields broke 0.50% for the first time since January 2016

Although US payrolls will be the primary focus, the G-20 summit should not be ignored given the US Presidents Trumps controvertible view of the brave new world. Expect the president’s tone to be bombastically pugnacious toward the developments in North Korea which move from the spotlight to under the microscope.

There is such an unpalatable level of uncertainty that suggests investor appetite for risk remains low.

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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