01/ 08/ 2019

Dollar Fueled Up by Fed Powell While Euro Broke Key Resistance as He Rules out Prolonged Easing Cycle

The EUR/USD pair fell to a fresh multi-year low of 1.1064 following the US Federal Reserve decision, largely anticipated by market’s participants. The central bank cut its fed funds interest rate by 25bps, attributing the decision to "muted inflationary pressures" and "the implications of global developments." The GBP/USD pair recovered up to 1.2249 this Wednesday, as the market put Brexit-related turmoil temporarily aside. The greenback traded with a soft tone during the first half of the day due to investors’ cautious stance ahead of the FOMC’s decision. 

Looking ahead, BoE rate decision is a major focus today. The central bank is widely expected to hold Bank Rate unchanged at 0.75%. Asset purchase target will be kept at GBP 435B too. Both decisions are expected to be unanimous. BoE will also release quarterly Inflation Report with updated economic projections. But after all, the form of Brexit remains the biggest risks to the UK economy and BoE will reiterate that policy actions to Brexit is not automatic.

31/ 07/ 2019

The Stage is Set for the FED Decision

The market’s mood turned sour during European trading hours, amid renewed concerns about the trade war between the US and China. Weaker-than-expected domestic data from China is also weighing on prices as well as general uncertainty ahead of the release of the U.S. Federal Reserve’s monetary policy statement, interest rate decision and press conference by Chairman Jerome Powell.

EU markets are broadly lower as earnings and Brexit fears grip the market. On the Brexit front, newly-elected UK PM Boris Johnson says the May Brexit Deal is dead. He requested the EU renegotiate and says there will be a no-deal Brexit if they won’t. The British Pound fell to a fresh 28-month low in response.

Looking ahead, the focus today is not on the pending rate cut, but rather the direction Fed boss Jerome Powell feels they will take rates in the months ahead. Today’s looming rate cut, which will be the first cut in over a decade in the US, is now all but a certainty. What traders are more interested in is what lies ahead. Aside from the FOMC, we will also get a first look at the US employment data for the month, with the private ADP data to be released today. This can be a good guide as to what we can expect come Friday when the official non-farm payroll data hits.

29/ 07/ 2019

Week Ahead | All Eyes on BOJ, FOMC & BOE

Dollar ended as the strongest one last week as boosted by solid economic data from the US. While markets are still pricing in full chance of a Fed rate cut this week, strong data argue against the chance of further easing after that. Euro and Canadian Dollar were the next strongest. ECB’s meeting and press conference came out less dovish than expected. While ECB did open the door for more rate cut, President Mario Draghi’s press conference suggested that he’s not in dead urgency to deliver easing.

Yen opens the week broadly higher yesterday, following mild risk aversion in Asian markets. Traders are turning cautious ahead of FOMC rate decision, a string of worldwide economic data, as well as resumption of US-China trade negotiations. Swiss Franc is the second strongest so far while Dollar is the third. On the other hand, commodity currencies are generally lower together with Sterling. The Pound is awaiting more guidance from Prime Minister Boris Johnson on how he’s handling Brexit.

Looking ahead of the day, key stats out of the U.S likely to have some influence on the FOMC statement tomorrow.Outside of the economic calendar, the markets also continued to consider geopolitical risk on the day. The U.S – China trade talks, Brexit and tensions in the Middle East were in focus.

25/ 07/ 2019

Euro Expected to be the Most Volatile Due to ECB's Risk

The European majors ended the day mixed yesterday. Monetary policy ruled the day as the markets continued to price in further easing by the ECB later today and by the FED next week.

The common currency neared the year low against its American rival, partially respecting the dominant bearish trend and in part due to discouraging EU data, reviving concerns about economic growth in the Union and lifting odds for steeper measures from the ECB. The GBP/USD pair has reached an intraday high of 1.2521 to settle later around 1.2480, up for the day. The Sterling’s advance had little to do with enthusiasm about the currency, but rather with some intraday dollar’s weakness at the beginning of the London session.

Looking ahead, it’s all eyes on the ECB as the markets look for ECB monetary policy later today. Corporate earnings and stats out of Germany will also influence.