What Price Action is telling us about the FOMC-Trade War and the Euro
|The FOMC outlook
Federal Reserve's high-wire act takes on a whole new level of importance tonight, and while the markets have pretty much come to a dovish conclusion. But without question, Chair Powell faces an agonisingly painful task crafting a sufficiently dovish signal without spooking the markets in either direction. So, I think the goal must be to convey an amply dovish messaging that will hold risk markets in check while providing a convincing blueprint for on how to move forward. Indeed, a trickier task than what meets the eye.
Trade War
Which brings me a full circle to this morning's pressing question, what odds do you put on this US-China trade agreement? Again, divorcing myself from opinion and based strictly on price action which suggests the markets now believe an imminent escalation has been pushed back, and the negotiating window isn't entirely as shut as we all thought. Suggesting Trump could delay exercising his option on 300 billion in tariffs, But just as it's difficult to predict the Presidents next tantrum it's just as challenging to predict his lasting sense of calm.
Currency Markets
Currency markets are doing little more than biding time while going through their obligatory pre FOMC position squaring machinations.
On the Euro
Adding to the range bound nature of the currency markets is the chatter of some chunky l expirations in EURUSD today around the 1.12 handle making the rounds. Confirming why the EURUSD is trading dead in the water and we expect the EURUSD should remain utterly range bound into the FOMC. But after yesterday's dovish comments from ECB President Draghi, the market is probably looking for an opportunity to sell Euro post FOMC unless of course, we get a shockingly dovish display from the Feds.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.