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.
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