July 15th, 2014
Volatility finally increased on Tuesday as fundamentals had a greater market influence with Sterling the stand-out performer as the dollar also gained ground after Yellen’s testimony.
As expected, the Bank of Japan held policy steady at the latest policy meeting. There was a slight downgrading of the growth forecasts which had some impact in curbing yen support as underlying confidence in the fundamentals remained fragile. USD/JPY edged to the 101.60 area with a stronger set of Chinese money supply and lending data also helping to underpin risk conditions. Read the rest of this entry »
July 14th, 2014
Given major events later this week and the inability to break narrow ranges last week, there were few expectations of high volatility during Monday’s trading, but Sterling did move lower under the weight of profit-taking.
Japanese yields remain very unattractive both in nominal and real terms which will maintain pressure for an underlying shift of funds overseas. Although there are still important difficulties in boosting outflows given regulations, yield pressures will remain a potentially dominant underlying factor. USD/JPY was able to gain traction with solid support above 102.25 as improved sentiment towards Portugal also curbed any defensive yen demand. Read the rest of this entry »
July 11th, 2014
Major currency pairs struggled for direction on Friday amid expectations that the Summer doldrums were liable to become a permanent feature for EUR/USD. After a nervous session the previous day, equity and bond markets had a calmer fell during the European session. There was relief that equity selling did not accelerate during the Asian session with players relatively sanguine over the Portuguese situation with only limited contagion fears. Read the rest of this entry »
July 10th, 2014
Wednesday’s Fed minutes were broadly in line with expectations as the FOMC remained more optimistic surrounding the economic outlook. There were expectations that the bond-purchases programme would end at the October meeting with a final US$15bn cut, but there were no major hawkish elements with commitment to an accommodative policy.
Even though St Louis Fed President Bullard stated that inflation was likely to overshoot next year and that interest rates were likely to rise earlier than markets expected, the comments also failed to provide a dollar lift as EUR/USD pushed towards the 1.3650 area. Read the rest of this entry »
July 9th, 2014
Markets were confined to narrow ranges on Wednesday, waiting for the latest Fed minutes and a key-note speech by ECB president Draghi later in the day for further evidence on likely monetary policy trends. Dovish comments from Minneapolis Fed President Kocherlakota had dampened dollar support despite evidence that the labour market is strengthening more quickly than expected. Read the rest of this entry »