Daily thread to exchange ideas and to share your thoughts
Happy Friday, everyone! Hope you're all doing well as we get into the European trading session. It's been a relatively quiet start to the day with major currencies still trading tepidly in spite of the recovery action seen in other risk assets i.e. E-minis, Asian and European equities, oil.
- Loonie leads as oil prices move higher
- Yen lags as sentiment improves, yields a little higher
- Other major currencies still stuck in a rut
- European equities are higher alongside E-minis
- Volatility drops slightly but remains elevated (VIX at 21.86 currently)
Despite the recovery in equities early on, risk sentiment remains very fragile still and I'd argue that the movement (or lack thereof) in currencies is right. We will have to wait and see how Wall Street performs later to get a better picture of whether or not the rebound here is a false dawn.
But in light of the trading activity this week, it presents a real peculiar case for analysing the US dollar which I covered here. It adds to a case of turning more dollar bearish in the months ahead: Fed reaching a ceiling on hikes, overstretched positioning, and possibly now lack of haven appeal?
That's something worth considering as we head into the year-end (ironically this is usually when the dollar funding does start to pick up) and into 2019. Any thoughts on the matter?
As for trading today, I would expect the tepid tones to remain until we get a clear direction to come from US traders. But hey, stranger things have happened. What are your views on the market right now? Share your thoughts/ideas with the rest of the ForexLive community here.
