One of the more watched interest rate settings in markets is the so-called ‘terminal’ interest rate – the point in the interest rate futures curve that reflects the highest point of future rate expectations – said differently, where the market feels a central bank could take its key policy rate by a specific date.
For those who really want to understand fed funds...
UK politics commands the international spotlight from time to time and that time is now. Yet, while we fraternise over Fed policy and how high the Fed could take the fed funds rate into 2023, UK politics and the impact on the UK gilt (bond) market and the GBP is firmly front and centre – the connection between British politics and the capital markets will almost...
We saw CADJPY finally reverse around 111.00 after an extended run to the upside. This was then followed by a monthly shooting star candle on the monthly chart, signaling a potential reversal. Sellers stepped in and we saw a drop to 104.50.
We've since then seen a pullback into 107.00 resistance, whilst market consolidated in a potential bear flag.
Could we see...
We saw EURCAD massively rally from the 1.3000 monthly support level to 1.3600 and close extremely bullish on the monthly chart, showing a clear candlestick reversal pattern after a significant drop in recent months.
We've since seen a pullback to retest the broken resistance, now support, around 1.3400 with the potential to head lower towards the liquidity pool...
The market opened last week on an optimistic tone, positioning on the belief that we could see something resembling even a minor pivot in the various dialogues. With the benefit of hindsight, this exposure couldn’t have been more incorrect, and central bankers pushed back hard. Fed members Mester, Cook, Kashkari and Evans all gave different degrees of hawkish...
In US trade, EURUSD moved to whisker from parity and found supply into the big figure – its hard to pinpoint an exact reason, but without being on an investment bank flow desk, we can believe this has been driven by a reduction in USD longs as equity markets rage higher – we also know US real rates have cratered in the past two days and terminal interest rates...
Given the moves in the USD and US real rates - Its probably no surprise that XAUUSD is also testing the top of its channel and its 50-day MA – this is similar to EURUSD, but price has progressed a little further. This has been gold’s time to shine as we’ve seen market-based measures of inflation expectation ('breakeven' rates) moving higher, while real rates have...
UK politics is always interesting viewing, especially when you have the luxury of watching from the other side of the world and where the policy choices don’t directly affect you. Clearly, the disconnect between the Truss govt and the capital markets has been brutally exposed, resulting in an exodus of UK assets and requiring some heavy lifting from the BoE in...
After a brutal week/month for risky assets, we turn the page and look to trade all the grenades that are thrown at us in the new week – the dynamic remains one of further fundamental downside risk, amid technically oversold conditions, which suggests any resemblance of good/less bad news should see pronounced upside moves. That said, much will need to go right for...
It's clearly not dull trading the GBP at the moment and the GBP is the wild child of G10 FX – the news flow has some incredible twists and turns, and pricing risk in this backdrop is almost impossible.
When any central bank makes up policy on the fly to appease market functionality you typically get massive moves, and that is what we’re seeing front and centre in...
After a defining week in financial markets we look forward to a noise fest from individual central bankers – on first blush, I count 22 Fed speakers, 30 ECB speakers and 6 BoE speakers all out on the wires this coming week. Strategically, it's hard to see them diverting too much from the central bank statements that inflation must be put to bed, and there will be...
Time – Thursday 21:00 AEST / 12:00 BST
The FOMC meeting may get the headlines this week, but with interest rate futures pricing 65bp of hikes this week’s BoE meeting - essentially a 40% chance of a 50bp hike and 60% of 75bp – with expectations split the prospect of GBP volatility is unsurprisingly elevated.
GBP Implied volatility is sky high - We can see...
Time:
• FOMC rates decision and quarterly economic projections (SEP) – 4am AEST / 19:00 BST
• Fed Chair Jay Powell’s press conference 04:30 AEST / 19:30 BST
Despite 13 central banks meeting this week and most expected to hike rates aggressively, it’s the FOMC meeting that is the marquee event of the week. With so many variables that could move markets, we look...
Rising as a talking point in social media and among Pepperstone’s crypto trading clients is ‘The Merge’ – a union between Ethereum and Beacon Chain, that takes place on Thursday (Google has a countdown clock).
Essentially, this long-awaited move, sees ETH move from “proof of work” to “proof of stake” system – the two systems are vastly different in their...
We roll into the new trading week with risk and sentiment on the front foot – a broadly weaker USD, a slight dip in US real rates and a 5% rise WoW in reserve liabilities (on the Fed’s balance sheet) all working concurrently as a tailwind. Certainly, the correlation with reserves seems key and where reserves go risky assets head in obedience – liquidity is always...
It’s days like this that running a trend and/or momentum strategy works wonders. The USD pairs, notably USDJPY, USDCNH and USDCHF are ripping – We see the JPY as the weakest though with USDJPY spiking to 143.59 in early trade today, on what looks like a stop run through yesterday's session highs and amid thin liquidity.
The trade-weighted JPY sits at the lowest...
We start the week with a clear focus on the energy markets, with Russia’s response to the G7’s proposal for price caps, being the continued shutdown of the Nord Stream 1 (NS1) pipeline. We have crude futures opening first up, and amid a shortened session - due to US Labor Day - the lower liquidity may exacerbate the moves – EU Nat gas resumes trade at 4pm AEST and...
EURGBP is on the move as the energy crisis cools in Europe and hawkish bets on ECB rate hikes becomes consensus. Price has broken through a key 0.86 resistance level and the RSI has slightly overcome the 63.68 RSI level, which has marked previous price rallies. It remains to be seen if price can reach the 15 June high of 0.872. 0.865 will need to be overcome...
