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Calmer for now

I wrote yesterday about markets generally losing their narrative in the wake of last week’s US Presidential election; not quite sure what to trade off and what to believe. That remains the case, although it is noticeable that things were calmer in the Asian session today, equities a bit more accepting of the fact that no-one has a proper clue what the future holds for the US next year. The main exception was Australia, where the latest jobs numbers were released. The headline employment number held steady at 5.6%, although the headline employment gain of 9.8k failed to reversed the revised 29k fall seen in the prior month. So something of a mixed picture and there remain concerns with the level of part-time jobs being created vs. full-time. The Aussie was marginally softer on the release. Elsewhere, we’ve seen little change in the main Asian indices, whilst the dollar has halted the recent rise, especially against the yen, as Fed speaker have given a more cautious read on the outlook.

The main focus today will be FOMC chair Yellen’s testimony to the economic committee on the economy. Text is released 13:00 GMT with testimony following at 15:00 GMT. This will probably not be the most comfortable appearance for her, given it’s likely to be highly politicised after the election result, but also difficult from an economic outlook, with so much uncertainty prevailing, especially around fiscal policy. As such, the dollar could be volatile and also vulnerable, should Yellen serve to undermine the view in the markets that more spending will push up both bond yields and also short-term interest rates. This should be an interesting afternoon session.

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