Markets Review RBA And BoJ Decisions Ahead Of Potential Hike From BoC
Two central bank meetings had already taken place before European desks even opened today (BoJ and RBA), but the outcomes have been largely in accordance with expectations. Unsurprisingly, the Bank of Japan held its overnight rate steady at 0.10%, but Governor Shirakawa and his colleagues failed to exploit this opportunity to influence the rapidly appreciating JPY to any noticeable degree. In...

Relief over Payrolls Supports Risk Taking...For Now
There was considerable hype leading up to Friday’s US data with many considering the payroll numbers to be the awaited trigger for an upswing in the US. A large surprise to the upside would have further discouraged the Fed from introducing additional QE, which had it happened would have given the USD a strong boost. Private payrolls did surprise to the upside a bit, with August numbers coming in...

Waiting on Private Payrolls
Markets are anxious ahead of today’s critical payroll report. The Forex Market settled into an easy range during the Asian session and traders don’t seem to be in any kind of hurry to open new positions given the uncertainly of today’s US data. One of the core themes this summer has been the seesawing fate of the US economic data and the probability of a double dip in the wider global economy....

FX Market Skittish Before ECB
The rally in risk appetite boosted by strong Chinese and Australian data yesterday was further encouraged after our last article by stronger than expected US ISM numbers. Forex risk correlated currencies, such as the Euro, moved lock-in-step with the data. EURUSD rallied above 1.2800 and the S&P climb above 1080. However, US rates weren’t invited to the party as players remained unsure – 10...

Chinese & Australian Data Supports Risk Appetite
The better than expected Chinese PMI and Australian GDP gave risk appetite a boost and allowed for the accumulation of risk-correlated trades. However, our gut feeling is that the summer risk on/off pattern is still in effect and we suspect the Asian momentum will fade as we get a slew of economic data today. The Asian surprise print help momentarily suspend the market’s obsession with global...

Looking Forward to US Data
With the UK on a long weekend yesterday, Forex traders had a slight pause in what has been a frenzied month. Enjoy it while you can, because September is notorious for being a volatile month and especially in the equity markets. This summer will be remembered (or maybe not) for its schizophrenic trading and a failure to maintain any meaningful directions or themes. This morning there is a...

BoJ Action Fails to Halt JPY Appreciation
Before we get into this week, let’s quickly talk about Jackson Hole. Right now it seems that the Market is just a few steps ahead of policymakers as there is growing feeling that central banks and bankers lack the essential tools needed to control this recovery. The decisions from this small group over the past few months all appear to be knee-jerk reactions – never intelligent stewardship or...

Markets Await Chairman Bernanke & US GDP Data
Forex Markets are still peacefully trading in ranges as participant await US GDP and any news from Wyoming. Sentiment is stable with Asian regional indexes marginally higher helped by yesterday’s slight positive surprise in US jobless claims. FX volumes are contained especially within leveraged circles, hinting that retail traders may be sitting this week out due to enormous event risk and heavy...

FX Markets Wait for Wyoming
An uncanny tranquility has spread over the Forex Market this morning. There was a feeling leaving the office yesterday that renewed fears of a global double-dip recession and sovereign risks were going to spiral out of control. However, US equity markets managed to close in positive territory while bond yields were mixed. During the Asian session, regional equity market indexes were able to...

FX Moves Defined By Safe Haven Flows
Risk-correlated trades fell hard yesterday as worries over the US economy reverberated through the market’s psyche. The core driver was the collapse of existing home sales which fell to a startling -27.2% and the June figure was revised down to -7.1%. US 10 yr yields broke the critical 2.50% level, while the 2 yr yields traded to new, all- time lows. Chicago Fed President Evans lamented the US...

Noda Fails to Halt Yen Buying
The recent void in fresh data was quickly eclipsed by a frenzy in JPY and USD buying which pushed USDJPY down to a 15 year low at 84.58 (at time of writing) and EURJPY below its Fibonacci level at 106.30. Remember the market importance of the Australian election? Neither do we. USDJPY falling below the 85.00 threshold most likely triggered model-based stops and options barriers around the 84.75...

Waiting for US Data to Help Provide Guidance
Forex traders were welcomed this week by a market filled with noise but little new information to provide any guidance. The Australian election was the main event over the weekend and the result produced a hung parliament since neither party gained the critical number of 76 seats for a majority. The Labour party took 72 seats and the coalition 70. The vast majority of pundits are harping on the...

Lack of Data Puts Focus on Equity Markets
Yesterday’s soft US data hit risk sentiment like a cannonball. Although the day was generally slow due to light data releases, the weaker US data sent summer participants away from risk-correlated trades in droves. Initial US jobless claims contained some distortions that were not mentioned in the report but as it was understood by participants, the 500k print validated to some that the US labor...

Media Articles Moving FX Markets
As we mentioned yesterday, the fact that pertinent and concrete economic data has taken a holiday (alongside everyone else) has allowed triviality and speculation to run amuck in the markets. Today’s culprits seem to be print articles coming out of both Japan and Germany. The Japanese newspaper Sankei reported that the BoJ is considering expanding their injections of liquidity through "new...

Waiting on the BoE Minutes
Fundamentals have clearly taken the back seat to fable mongering and inflated headlines this morning. The hot-cold risk-appetite trades have picked up a schizophrenia-like pattern and Forex has yet to develop a sustainable trend across any major pair. We are still seeing a level of divergence between treasuries, stocks and commodities which hasn’t assisted in providing some much needed clarity. ...

Markets Watching Irish Debt Auction & US Data
The buzz this morning is China’s sudden lack of interest in US debt and renewed concern over some EU economies. Looking at market behaviors in Forex, stocks and bonds verse the economic data and global events coming out, it is becoming increasingly difficult to identify a comprehensive trading theme. Perhaps it’s a function of news flow hitting the liquidity markets with exaggerated reactions...

UK Data Of Critical Importance To GBP This Week
Without a doubt, the most important currency to be watching this week will be sterling. The big story in the UK is the persistently high level of inflation which has been well in excess of the MPC’s 2.0% target and indeed the 3.0% threshold set by the Treasury throughout 2010. For much of the year, this surge has been disregarded or overshadowed by the BoE’s unwavering focus on vulnerable growth...

Today's US Economic Data in Focus
The Forex market is fairly quiet this morning as prices aren’t really moving in any particular direction. There was some slight USD selling during the Asian session but nothing to write home about. For prices to move substantially, more information needs to be released for the market to accurately judge and clarify risks in the current environment. Yesterday’s US jobless claims disappointed as...

Risk-Correlated Trades Get Thrashed
Risk-correlated trades took a thrashing yesterday as concerns over the weak US recovery gave way to macro-concerns about the fragile global recovery. Soft retail sales out of China and the large US trade deficit multiplied by the FOMC’s bearish review caused risk appetite to shrivel. The pessimism reignited fears of a potential relapse in EU sovereign problems as news broke that Ireland still has...

Fed Members Sound Cautious on Recovery
The key takeaway for yesterday’s FOMC meeting was that Fed members seemed less confident about the US recovery. The erosion in their optimism spread quickly to weigh on risk-correlated trades and further contracted US yields. Interestingly, the knee-jerk reaction in the Forex Market was the buying of the EURUSD. The Euro jumped nearly 50 pips against the dollar but as further analysis of the...