Week In FX Europe – Market Cannot Side-Step All Fed Rhetoric

Investors have had to side step month-end, quarter-end and mid-year portfolio adjustments. However, they could not escape some compelling Fed rhetoric on the final Friday of June. Since helicopter Ben’s failed attempt at transparency at last weeks post-FOMC press conference there have been no fewer than five Fed speakers attempting to clarify his points.

The plethora of Fed speakers have gone out of their way to point out that the market has got it wrong with the rate outlook. Fed’s Fischer, Dudley, Powell and Lockhart have used adjectives like “feral hog’s” and “cold turkey” to describe some of the out-of-sync rate movements that investors have endured over the past nine-day’s.

Have some members already decided on September? Fed governor and voting member Stein happened to reignite the QE tapering market anguish on Friday when he argued that the central bank should be “clear that in making a decision, in say September, it will give consideration” to the economic progress made since the start of easing. Comments like this suggest a lowering of the bar for a possible QE tapering in September. US treasuries immediately backed up on this comment.

Investors should be expecting more Fed speakers to try and stay to their script and calm market fears over the rate path. It is difficult for investors to wholly understand the Fed’s message in its entirety. Given the basis upon which the central bank has expanded its balance sheet, the current reasons to taper/end QE so soon is certainly “a large pill to swallow.” Next week’s NFP release will play a pivotal role – a strong US payrolls number could easily send markets back into panicked position reduction, in other words another tailspin.


* CNY Manufacturing PMI
* EUR Euro-Zone Consumer Price Index Estimate
* USD ISM Manufacturing
* AUD Reserve Bank of Australia Rate Decision
* GBP Bank of England Rate Decision
* GBP BOE Asset Purchase Target
* EUR European Central Bank Rate Decision
* USD Change in Non-farm Payrolls
* USD Unemployment Rate
* CAD Net Change in Employment

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.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments.
He has a deep understanding of market fundamentals and the impact of global events on capital markets.
He is respected among professional traders for his skilled analysis and career history as global head
of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean
has played an instrumental role in driving awareness of the forex market as an emerging asset class
for retail investors, as well as providing expert counsel to a number of internal teams on how to best
serve clients and industry stakeholders.
Dean Popplewell