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FxProUpdates

Market Reaction to February 2017 NFP (March 10)

The US Nonfarm Payrolls and Unemployment Rate are out this coming Friday, March 10th 2017, at 13:30 (GMT), and will most likely cause significant volatility in the markets. Considered the one economic indicator that never fails to trigger sharp market movements both in the minutes leading up to its release and in its aftermath, the NFP data is released by the US Department of Labor on the first Friday of each month and outlines changes in the number of employees, excluding farm workers and ...

FxProUpdates

Equities FX and the US Election

We’re counting down the final hours to what promises to be the most exciting US election since 2000. The past two seeks have seen markets take on the prospect of a Trump Presidency far more seriously. This can be seen in the weaker dollar, weaker Mexican peso, together with sharp in increases in volatility measures, both for FX and more so for equities. But can history tell us anything? By first looking at historical market reaction, we can make several observations. With regards to the ...

Devata Tseng

USDCNY Hit Six Year High, Test Major Resistance

As the world obsesses about the US election, we’re going to look at China and the currency in particular. China has always been the ‘elephant in the room’ for the global economy. It maintained strong levels of growth in the wake of the global financial crisis, supporting world demand as major markets slumped. But this was at the cost of greatly expanded lending, a cloud which has hung over China in recent years. Much has been made in the past few weeks of the move higher in the USDCNY exchange ...

FxProUpdates

This time is different in the US Presidential race

In September, markets obsessed about the US Federal Reserve – would they or won’t they raise interest rates. That didn’t happen, but what is certain is that the US will choose a new President next month. So far, this prospect has not overly pre-occupied markets. Either that is to come, or they believe that the choice of President does not matter that much because power lies with Congress and within that, a Republican party who were not that enthusiastic about their candidate. That same Congress ...

FxProUpdates

Kitchen sink full of medicine

The ECB has taken a six-pronged approach to the latest policy decisions. This is their “kitchen sink moment”, similar to the BoJ back in late 2013 when they went all in with news and bigger measures to tackle deflation. The move has initially knocked one big figure from EURUSD. After December disappointed in the size and scope of the measures announced, the markets were naturally reluctant to push the currency lower. Furthermore, the risk averse environment that has prevailed through a fair ...

FxProUpdates

Russia’s Oil Price Problems

I remember around 10 years ago meeting an analyst who covered Russia. This seemed a very interesting opportunity to learn about how the Russian economy and its relationship with the world. Yet his presentation consisted of chart after chart of the oil price super-imposed over some measure of the Russian economy; be it exports, the budget deficit or growth. The message was that pretty much everything was correlated to the oil price. If you understand and, even better, can forecast the oil price, ...

FxProUpdates

Will Brexit Break Sterling?

Exchange rates and money markets are inextricably linked; after all you are just exchanging one form of money for another and the price of money (as an asset or liability) is tied up in the interest rate. If it was that simple, then forecasting exchange rates would just an exercise in future monetary policy changes. But it’s not that simple and so far this year there have been many examples of why this is not the case, of which sterling provides the most pertinent. There has been plenty of talk ...

FxProUpdates

Yellen the dove

Finally the Fed has delivered and we now officially enter the US tightening cycle following their hike of 0.25% from 0.25% to 0.50%, the first since June 2006. Whilst the vote was unanimous and short-term interest rates on US Treasuries spiked, causing a brief bout of dollar strength with GBPUSD initially dipping below the 1.5000 level, a flattening of the yield curve following the decision showed that short-term rates might be higher, but long-term rates are not in a rush to rise as the ...

FxProUpdates

Nonfarm payroll removes Fed uncertainty

After the disappointment from yesterday’s ECB meeting that led to a big spike in volatility across all asset classes we’ve seen today’s major nonfarm payroll data announcement from the US which has come in at 211k, above the expected 200k figure and even November’s impressive release of 271k was revised upwards to 298k. Before the release Fed Fund futures were pricing in a 74% chance of tightening commencing in just under two weeks time, but this makes a rate hike from the Fed on 16th December ...