Briefly Took The Market’s

Forex News and Events: FX markets sprung to life yesterday after Fed chairman Bernanke’s afternoon comments. The chairman has been trying to play down the market’s expectations of an earlier than expected rate hike (2013 vs. 2014). He directed his comments on the pace of economic growth and stated that the current gains in job creation were not in-sync. The Chairman sounded unconvinced and cautioned that the rate of recent employment gains could be sustained unless economic expansion picked up significantly. There is clearly a divergence of opinion within the Fed, between those that are ready to pullback from QE and those that are looking for a reason to pull the trigger. Judging from the market’s reaction of bidding EURUSD higher, the argument for additional easing seems to be more ...

Forex News and Events: Risk sentiment is lower however, conviction remains light and FX trading fickle. We suspect that risk are skewed to the downside and continue to fade risk rallies. As was widely expected, the media outlets are reporting that the US “super committee” has failed to reach an agreement on $1.2tn in new spending cuts. The formal announcement is expected in the US session today. The news that the bi-partisan committee on deficit reduction was a failure has further eroded the markets confidence that policy makers, on either side of the Atlantic, have the ability to address mounting deficit problems. Asian regional indices were slightly lower, with the Nikkei down -0.40% and Hang Seng –0.20%. FX reaction was muted, with the EURUSD bouncing between 1.3469 and 1.3541, while ...

Ursa Major in the sky Time to sell stocks is nigh Last night was bright and clear in France. We could see the Milky Way stretched out against the dark background. And there was the bear…Ursa Major. Last week, stocks got hammered…mauled…beaten up… Market veterans said they had never seen the buy/sell ratio more lopsided towards selling. But why? In the past couple of weeks we’ve seen zombies rising up and markets crashing down. Not the way we usually like it. But interesting…no? In the weekend news comes word that the Social Security Disability program is almost broke – thanks to so many claims. And California’s official joblessness figure is at 12%. Want more bad news? What’s wrong with you, dear reader? Do you get a thrill from the suffering of others? Of course not! You just ...

As we had suspected, the risk premium in FX assigned to events in Egypt wore off in yesterday’s European session. EURUSD quickly climbed off the 1.3570 base to 1.3750 as traders realized that regional contagion was a remote possibility. The sterling has been on a tear since its dreadful GDP printed with the cable trading up to 1.6135 today. Asian equities are moderately stronger at the time of writing after the S&P 500 finished 0.77% ahead. Crude continues to maintain the Egyptian risk premium built from Jan 28th with Brent having broken above $100 while WTI is holding just below $92. The redirection from Egypt back to economic data was clearly sparked by the European CPI reading that unexpectedly rose to 2.4% y/y. With the ECB meeting on Thursday and Trichet’s recently hawkish comments ...

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 market is faltering. The Philadelphia Fed manufacturing index - while generally disregarded as only a small representation of manufacturing, fell to -7.7 from 5.1. The small loss has many concerned that broader US manufacturing indexes will fall below the critical 50 threshold. Interestingly, G10 Forex pairs were split against the USD with beta currencies such as CAD and AUD losing ground while ...