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QE might have ended in US, but Japan eases further

The initial dollar strength following the FOMC on Wednesday was partially unwound as it looked like the bull run was struggling to shift up a gear. If there was ever any doubt in the mind of the dollar bulls it will have been laid to rest earlier this morning by the Bank of Japan who unexpectedly increased monetary stimulus taking almost everyone by surprise, not because further measures were not expected, but because it was thought the BOJ wouldn’t move quite so soon. USDJPY has not only ...

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QE ends, next stop rate rises

The FOMC decision last night gave us the expected historic end to QE III which really should have come as no surprise however the dollar reacted as if it was. Relatively hawkish comments about the labour market caused USD to spike strongly as the market readjusted for the next move from the Fed, which is now going to be interest rate hikes even if they might not come well into the latter part of 2015. The dollar strength continued overnight and into this morning with USDJPY back above 109.00, ...

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Dollar struggles despite historical end to QE

The dollar strength seen in August and September has come up against some stiff resistance in October and even yesterday’s much better than expected US consumer confidence numbers were not enough to attract dollar buyers, whilst the data did lead to further risk appetite for to indices with the Dow closing back above the 17,000 level. The index has now bounced 5.4% since hitting a multi month low only days ago. Overnight the Kiwi has seen a bit of strength following better than expected ...

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US consumer confidence smashes expectations

US consumer confidence came in at 94.5 well ahead of expectations of a decline from 89.0 to 87.0. This is giving the dollar a like help, lifting it off its session lows having been drifting lower following the poor durable goods data earlier. The most impressive thing about this figure is that it shows US consumers have not yet had their confidence dented from the Ebola scares and could draw a line under the recent dollar weakness, especially since the Jobs Plentiful / Hard-to-Get data was also ...

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Dovish central banks

The dollar has failed to re-establish itself as the dominant currency following a retracement so far in October and yesterday’s economic data didn’t do too much to help it as PMI surveys were released lower than expected. Even though the Federal Reserve is expected to end QE III this week the market’s recognised that interest rate rises are a long way away as concerns over the outlook for global growth continue to mount. Not even the indecision and tangible concern in the equity markets is ...

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Focus to shift to Fed following ECB stress tests

The ECB’s stress tests have passed and it looks like third time lucky for the European banking sector although the focus is on Italy which has seen as many as nine fail. The euro managed to regain the 1.2700 level over night and is just below there at the time of writing trading at 1.2690 and indices are expected to see a degree of risk appetite return this morning. Of course the wider concern and real test is whether this means European banks will start to lend again and help prevent further ...

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UK GDP in line

UK GDP rose 0.7% QoQ in Q3, in line with expectation. Cable has popped higher by around 20 pips to 1.6050, just on short-covering and the fact that support at 1.60 now looks a little safer now near-term risk has been removed.

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Struggling to return to normal

There’s no doubt that a calmer tone has emerged in markets this week. Stocks have recovered for most of the week and the spike higher in forward volatility measures seen in both FX and even more so in equities have been partially reversed. This has also allowed the dollar to recover from the mid-October lows (dollar index), naturally helped by the move higher in US 2 year yields, from the low just above 0.30% to around 0.38% now. But the dynamics are not powerful enough to re-establish the ...

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GBO softer after sales data

GBP sitting above 1.6000 after softer than expected retail sales data for September. Both headline and underlying measures fell 0.3%, coming on the back of MPC minutes yesterday which were more cautious on the global economy overall. We've also seen a mixed picture in terms of eurozone data, with better German PMI data contrasting with weaker numbers from France. EURUSD remains in trapped in a tight range for now though.