Last quote by Stephen Innes
Stephen Innes quotes
Traders have been quick to price in worst case scenario as interest rate rise jitters start taking hold and have resulted in some fairly assertive moves in bond, equity, and forex asset classes.
U.S. rate hike fever continues dominating the foreign exchange landscape. The U.S. dollar is trading favorably despite the next major catalyst, Friday's jobs report. The market is stuck between the good cop, bad cop performance from Yellen and Fischer at Jackson Hole.
Bondholders typically like funding with the cheapest end of the curve, which is the overnight repo markets, and this move could pressure bond markets as funding cost would move higher. It is also designed to ensure that short-term money gets distributed to the economy and not speculators.
Without the Federal Reserve Board doing the heavy lifting (with a U.S. interest rate hike) and with the Japanese economy seemingly immune to monetary and fiscal stimulus, it will take little more than a few consecutive session probes below 100 yen for traders to be hotly testing the BOJ's resolve, while knocking on the post-Brexit spot level at 99.02 yen.
His enchanting words sent equity markets into a froth. In another case of deja vu, and despite signals pointing to a potentially enormous bulge in crude stocks for 2017, there appears to be no taming of the oil market bull when OPEC speaks.
While the US equity market response is encouraging, it is important not to factor too much into one single monthly report, as more data is needed to confirm that the dismal May jobs report was an aberration.
There's a high level of complacency in dollar/yen trade as the markets have no defined direction other than chasing risk sentiment. I expect further probes lower as the latest Brexit sell-off is simply the tip of the iceberg.
For the most part, trading has been periodic amid dwindling liquidity. While we expect liquidity to deteriorate as we near the final outcome, market depth is playing out as anticipated. We should expect a high level of volatility, bordering on excessive at times, as results hit the wires.
The BOJ ... will likely delay a rate cut in the meeting, favoring a coordinated event when the government releases its fiscal stimulus package in Autumn. This delay will likely appreciate the yen over the short term if the BOJ remains sidelined.
We have had a solid rebound [in the dollar/yen] after testing the 106.35 depths.
I don't think there was any clear-cut forward guidance that the market could read from that and I think that's why we're seeing the trend continue.
When the dollar weakens, the yuan peg follows. When the dollar is firmer, the yuan peg resorts to the basket mechanism to smooth out the inevitable yuan depreciation, and slow the pace of capital outflows.
I suspect we could see a bottoming on this recent dollar/yen capitulation in 108.50-109.00 range.
I suspect the BOJ gave into the domestic uproar that negative interest rates policy are destabilizing the currency markets, along with negatively impacting local banks. Big business won this round.
The Mighty Fed's decision this week will likely lay the groundwork for dollar fortunes through 2016.
Unless there's a clear cut improvement on both domestic inflation and growth, coupled with solid concrete improvement in the global economic landscape, it's likely the Fed will err dovish through the second half of 2016.
The market didn't break below the key 107.50 handle on Monday and gradually found support as oil prices started to stabilize. Add in the backdrop of higher U.S. yields from the buoyant Dow and a resurgent Nikkei.
I think we are starting to see pricing of speculative shorts [on the yen] for a few reasons.
The collapse of the oil production freeze summit has caused a wave of selling across the commodity block currencies.