29/ 10/ 2017

Week Ahead | BoJ, Fed and BoE to meet, Non-Farm Payroll in Focus

The U.S. Dollar surged last week to a multi-month high, while the Euro fell to a three-month low after the European Central Bank extended its bond purchases, reducing the odds that it would hike interest rates in 2018. The Greenback was also underpinned by rising U.S. Treasury yields and increased risk appetite.

The upcoming week opens a new month and packs as BoJ, Fed and BoE will meet this week. The key focus in on BoE rate hike and vote split. Sterling has been very resilient because of expectation of a 25bps rate hike by BoE. And that was supported by the above expectation 0.4% GDP growth in Q3 released last week. However, the Pound could suffer some steep selling if what BoE delivers this week is seen as a dovish high.

Also, it's Super Thursday time and BoE's quarterly inflation report will also be closely watched. Dollar, on the other hand, will look into a string of key economic data, in particular October non-farm payroll. Strong NFP number and wage growth will bolster the case for December Fed hike. And more importantly, Fed is projection three more hikes next year, without tax cuts taken into consideration. Solid growth data, come back of inflation, and positive news on tax cuts in the upcoming weeks solidify the cases for Fed.

26/ 10/ 2017

Taper Tantrum or EUR Slump – It’s in Draghi’s Hands

The Euro rose against the greenback yesterday as the dollar turned lower, struggling to post further gains tied to speculation the next chair of the U.S. Federal Reserve will steer policy in a more hawkish direction. Taylor favors a rule-based approach to setting interest rates and is seen as someone who may put the Fed on a path of faster interest rate increase compared with Fed Chair Janet Yellen.

Meanwhile, EUR has been in recovery mode ahead of this afternoon’s ECB monetary policy decision which is the highlight for today and the more important press conference, with plenty of speculation over the anticipated tapering to the asset purchasing program for next year dictating the direction for the EUR.

25/ 10/ 2017

Next FED Chair: Is it Powell, Taylor or Yellen?

For the second day in a row US Politics dominated the investor focus along with positive data from both manufacturing and services sectors in USA. President Trump visited Senate Republicans for lunch on Tuesday, and predictably traders took note of the market whispers surrounding Tax Reform and the next Fed Chair.

The race is now between the 3 shortlisted candidates where one is the Current Fed Chair, one being a Current Fed Governor and other being a Stanford University professor who is more likely to be the next Fed Chair.

Today is a big day for Loonie, where BOC is expected to take a decision on Interest Rates and their stance on Monetary Policy Statement. Furthermore, Euro zone economic surveys, UK GDP, US Durable Goods and US Housing Data will move the markets.

24/ 10/ 2017

What's next for EUR?

Dollar gained more strength on Monday, on the back of positive news from last week with U.S. Sanate passing the Budget resolution for Trumps Government. With this news Treasury yields rose on Friday, with two-year yields reaching a near nine-year high. This move also raised the expectations of the Republican-controlled Congress and U.S. President Donald Trump would be able to enact their tax-cut package as promised during his election campaign.

However, traders were a bit cautious with the trading as key events such as BoC and ECB meeting, as well as UK and US GDP are lined up for later in the week. Furthermore markets were on speculation mode as to whom will be appointed as the next FED Chair while there are Candidates such as current Fed Chair Janet Yellen,  Fed Governor Jerome Powell and Stanford University economists John Taylor. Euro had a disappointing day as Catalonian government officials said that it will defy orders from Spanish government when it imposes direct rule adding instability to Euro zone politics.

Tuesday brings the latest PMIs from several Euro Zone countries,start with French followed by German then US PMI.