No Muss no fuss

No Muss no fuss

While the ECB’s guidance remains unchanged, the central bank lack of concern on the surging euro was a strong enough signal to send traders scrambling for top side EUR FX exposure.

So much frenzy in EUR FX at the moment; it’s hard not to get carried away with the action.

But one thing that is crystal clear, Investors want to be long EUR and related proxies heading into the asset-purchase program (APP) taper which may be announced as early as the Jackson Hole 2017 Economic Symposium,(Aug. 24-26, 2017.).Circle Draghi’s August 25th speech on the calendar as this will be a huge event so expect vol risk premium to ratchet higher as we near that date

But this move is not just about Draghi failing to express a currency view. The EUR kicked into high gear taking out 2016 high when news hit that Special Counsel Robert Mueller was looking into President Donald Trump’s business transactions as part of the exploration into the Trump campaign’s ties to Russia. This revelation is huge as just last week President Trump said that expanding the investigation beyond Russia would be out of bounds so with Muller broadening the Inquisition into Trump’s business dealings, US political risk could move to whole new level as this foxtrot plays out.


Price action suggests US dollar selling remains the Flavour du Jour as investors were caught desperately short of euro. When it rains, it pours, so it seems for the beleaguered greenback these days which in the absence of critical primary economic data is unlikely to get a reprieve from the political lambasting the Trump administration is wearing.

Australian Dollar

The Euro is not the only game in town as the market sits tight awaiting an unblurred hawkish signal from RBA. After yesterday knee-jerk higher on last month’s robust jobs performance with a +62k print in full-time employment, profit taking set in immediately as yield retraced in a blink of the eye.But I suspect Aussie longs were getting a severe case of the heebie jeebies ahead of the RBA member Guy Debelle’s speech as he will be peppered with questions about the surging A$ and the market reaction to the RBA minutes

Two outcomes, Debelle does the Draghi shuffle and fails to discuss FX and policy in the same sentence, or he takes the opportunity to pare back recent moves in both yield and the currency. Either way, this could get exciting.

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