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So, the Fed pretty much delivered on expectations as they began tapering and maintained the transitory language somewhat while not really going aggressive on rate hikes.
The question now is, what's next? Well, not much has changed in terms of the overall picture as such as the Fed stuck to the script.
The bond market reaction has been calmer than anticipated but it's still early in saying that the market is done with pricing in a policy accident by central banks. But at least for now, the yield curve is reflecting some calm and that's helping with the overall mood.
US non-farm payrolls on Friday is another key risk event to watch as I'd argue that dollar sentiment now hinges on how much the market feels economic data will tilt the Fed towards hiking rates sooner rather than later.
As for today, the pound will come into focus amid the BOE and while a rate hike may give the quid a boost in the immediate reaction, I fear that it will only be a brief one as policymakers are likely to reiterate a limited and gradual approach to tightening further.
On the flip side, if the BOE doesn't deliver a rate hike, I can see that upsetting the pound so the risks are skewed towards either fading the initial pound spike or just some light selling in the aftermath as rate hike bets get pushed to December/February.
Elsewhere, oil is back down close to $80 and while that may suggest further downside on a firm break below the figure level, I'd argue it is a healthy correction in searching for more upside over the next few weeks/months at least.
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