The Waiting Game

The Waiting Game 

Markets have reached a crossroad and dealers are sitting tight ahead of FOMC. It seems like a typical pre FOMC week with low currency volatility, as US Yields are staying within range.

However, equity markets continue to reach higher ignoring possible Fed monetary policy implications as investors remain focused on US tax reform. But with stock markets at an all-time high, it remains puzzling why investors are not showing a greater level of caution into what should be a very significant call for the Feds. Of course, we must respect price action, but from my chair, risks are near level for a hawkish tilt from the FOMC, even more so if they decide to overlook months of weak inflation data after the essential CPI inflation gauge readings finally broke the previous string of five consecutive downside surprise.

It would not be so far-fetched the Feds come out firing on all cylinders and pave the way for a December rate hike.

Trump headlines from the UN General Assembly provided some curious soundbites, but little market reaction.

The waiting game has set in as FX markets continue to debate the concerning pace of monetary policy normalisation ahead of the key FOMC with the greenback looking for a new narrative.

Japanese Yen

USDJPY remains supported on the on the increasing possibility of a Japanese general election. With Abe cementing his lead in the polls and with the opposition in disarray, an Abe win all but guarantees extended Abenomics and a weaker JPY.


As expected the G-10 traders have respected the 1.1900 -1.2000 ranges as the EURUSD more or less remains  mired in pre FOMC position squaring

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