Saturday December 5, 2015 - 10:39:11 GMT
Share This Story
Global-View - www.global-view.com
Central Banks A Source Of Turmoil
John M. Bland
Buy the Rumor Sell The Fact Beware of markets when there is a strong market consensus for a given outcome. Traders had been waiting for over a month for ECB President Draghi to announce a stimulus program that was expected to increase liquidity in the Eurozone, and as a result weigh on EURUSD. So the markets were positioned heavily short the Euro and investors were "priced to perfection" for the Draghi announcement. The Draghi announcement generally fell short of what was expected. Word spread in the markets that Draghi had been unable to get his full program through the policy board because of opposition from several members. I wonder if this was the final easing step of the cycle. Often it is how a market is positioned that matters more than the news. As a result there were rounds and rounds of short-covering that saw the EURUSD rally from below 1.0600 before the news to just shy of 1.10 near the end of the session. This is a major move in forex trading. ECB Officials were out all day Friday doing "damage control" on the market turmoil they had generated.
Fed Lift-off in December On Track Fed Chair Yellen spoke on Wednesday and testified on the economy Thursday about Fed policy. She did nothing to refute the view that the Fed is preparing to hike the Fed funds target on December 16. Some have a theory that the FOMC doves have given into the rate hike decision in return for an agreement that the next hike will not take place until the rate of inflation starts to "improve", i.e. rise. That means the next tightening might not take place until well into 2016. Bottom-line, the changing Fed/ECB policy scenarios are not as constructive for the USD against the EUR as we all had felt. November U.S. employment data on Friday solidified the odds for a rate lift-off on December 16.
Weekly Calendar The upcoming week is a relatively quiet period for major economic data. -- Monday December 7, No Major Data -- Tuesday December 8, EZ- GDP -- Wednesday December 9, CN- CPI, NZ RBNZ Decision -- Thursday December 10, AU- Employment, CH- SNB Decision, GB- BOE decision -- Friday December 11, US- Retail Sales, University of Michigan Survey Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founder www.global-view.com
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."