What a week we had! Not sure where to start, yet can we agree that nothing was outstandingly dollar bullish? Yet the greenback trades at multi-month/years highs against most of its rivals. If that does not tell you something, I’m not sure what will. True, the American currency looks overbought, COT reports from the last couple weeks show the amount of longs is also overstretched, particularly against EUR and JPY, but beyond that, there are no other signs the trend may be soon over. And that alone is far from enough.
This week we learned the FED is not yet willing to unveil when rates are going to go up, and that remain conditioned to data. In fact, latest FOMC meeting brought nothing new to the table. Upcoming October meeting won’t have a press conference, meaning if something, we will learn more on rates in December from Mrs. Yellen.
We also learned the UK will remain the UK, with Scottish referendum ending up with NO winning with a bit more than the 55%: with market having priced in such victory over the last two days, the GBP/USD is over 200 pips down on Friday from the high set at 1.6523 after the news, barely positive in the week.
In Europe, inflation remains at depressive lows, with the YoY reading at 0.4%, while the first round of TLTRO was quite disappointing as banks only borrowed 82.6B EUR well below market expectations below 100/300B. The lower than expected allotment demand despite weighting in the common currency short term, may need some time to fully work, and worth remembering the plan will extend for four years.
So what’s next? Well, market will start looking for clues on when the US and why not, the UK will raise rates: data will be traded accordingly for once, with positive data favoring advances on both currencies: chances of GBP capitulating to dollar current strength are quite limited, and if the pair falls anyway, the movements will likely be far more limited than against other rivals.
The last week of the month is usually a light one, but with some sparks of action here and there: starting Monday, the key event will be Draghi speaking: he is Due to testify on monetary policy before the European Parliament's Economic and Monetary Committee, in Brussels, which means we could have a quite entertained day for a change: he will likely comment on the TLTRO results, probably with an optimistic stance which may give the EUR/USD some intraday support, a chance to add to shorts. A dovish stance will pressure the common currency, which means he can do little to fight the dominant trend. European PMI’s on Tuesday are next, probably triggering little short term reaction, but no doubts weighting on the overall trend if they come out negative.
By the end of the week it will be the turn of the US with Durable Goods Orders on Thursday and GDP on Friday. As for the first, there was a huge jump higher last month due to aircraft demand and stands at 22.6% which means it will be hard to match, as is an exceptional reading: market expectations are of a decline of 17.1%, quite logical considering the exception. Any reading above it should be dollar supportive, while a positive one will likely trigger selloffs in EUR and JPY against the greenback, with AUD following close. As for US GDP, is a final revision of the number, so the impact is usually bounded. Nevertheless, market expects an upward revision to 4.5%, and if reached, will be the highest reading since early 2010 and therefore should give the dollar another lift.
This week we learned the FED is not yet willing to unveil when rates are going to go up, and that remain conditioned to data. In fact, latest FOMC meeting brought nothing new to the table. Upcoming October meeting won’t have a press conference, meaning if something, we will learn more on rates in December from Mrs. Yellen.
We also learned the UK will remain the UK, with Scottish referendum ending up with NO winning with a bit more than the 55%: with market having priced in such victory over the last two days, the GBP/USD is over 200 pips down on Friday from the high set at 1.6523 after the news, barely positive in the week.
In Europe, inflation remains at depressive lows, with the YoY reading at 0.4%, while the first round of TLTRO was quite disappointing as banks only borrowed 82.6B EUR well below market expectations below 100/300B. The lower than expected allotment demand despite weighting in the common currency short term, may need some time to fully work, and worth remembering the plan will extend for four years.
So what’s next? Well, market will start looking for clues on when the US and why not, the UK will raise rates: data will be traded accordingly for once, with positive data favoring advances on both currencies: chances of GBP capitulating to dollar current strength are quite limited, and if the pair falls anyway, the movements will likely be far more limited than against other rivals.
The last week of the month is usually a light one, but with some sparks of action here and there: starting Monday, the key event will be Draghi speaking: he is Due to testify on monetary policy before the European Parliament's Economic and Monetary Committee, in Brussels, which means we could have a quite entertained day for a change: he will likely comment on the TLTRO results, probably with an optimistic stance which may give the EUR/USD some intraday support, a chance to add to shorts. A dovish stance will pressure the common currency, which means he can do little to fight the dominant trend. European PMI’s on Tuesday are next, probably triggering little short term reaction, but no doubts weighting on the overall trend if they come out negative.
By the end of the week it will be the turn of the US with Durable Goods Orders on Thursday and GDP on Friday. As for the first, there was a huge jump higher last month due to aircraft demand and stands at 22.6% which means it will be hard to match, as is an exceptional reading: market expectations are of a decline of 17.1%, quite logical considering the exception. Any reading above it should be dollar supportive, while a positive one will likely trigger selloffs in EUR and JPY against the greenback, with AUD following close. As for US GDP, is a final revision of the number, so the impact is usually bounded. Nevertheless, market expects an upward revision to 4.5%, and if reached, will be the highest reading since early 2010 and therefore should give the dollar another lift.
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