Low appetite for positions after the FOMC and into the weekend

Fundamental View

Yesterday’s session was fairly muted as we saw the consolidation of the FOMC statement released on Wednesday evening. The largest move seemed to be in the dollar space; both the EURUSD and the GBPUSD both retraced the entire FOMC push higher as some participants began take profit on a move that was, fundamentally speaking, overdone. With data posting firm readings in terms of employment, Initial Jobless Claims posting below the expectations and 300k benchmark, the Fed’s data dependency clause kicked in and allowed the move to extend further, bringing some dollar strength back to the table. We also saw the Philadelphia Fed Business Outlook print 2 points below the analysts’ average estimates. The Bank of England’s Chief Economist Haldane provided surprisingly dovish comments as he stated that risks to inflation are ‘skewed to the downside’. He also made mention of being able to make a case for policy easing today. This was in stark contrast to Carney’s hawkish comment from the minutes which said that ‘it would be foolish to cut rates.’ This provided a slight push lower in the GBPUSD but we have since regained some of the lost ground against the greenback.

Into the Weekend

With the absence of any US data of note this afternoon, I want to pay more attention to Greece. Pressure is increasing from mainland Europe to speed up progress as the ticking time-bomb that is Greece’s deadline looms. Tsipras has been vocal highlighting a positive outlook, emphasising all parties were on the same side and making good progress after talks broke down earlier in the month. Angela Merkel on the other end of the spectrum has been decidedly disappointed with progress made, hinting that the incomplete list of austerity reforms are unsatisfactory. Worries of other European nations that Tsipras will pull a Ted Beneke are also assisting market participants’ cautious outlook. This has also aided the USD remain on the front foot against the Euro as until this is resolved we maintain caution holding medium- outlook long positions; going into the weekend there is potential for de-risking long holds so traders are advised to remain risk-aware going into the European close.