Category: Daily Look

Tensions in Ukraine and the Middle East shape investor sentiment



Geopolitical tensions have come to the fore once again and investors are shunning risk assets.  Classic moves into the Yen, gold and dollar were the theme of yesterday’s session and once again questions are being raised about the sustainability of the equity market strength with the rally now looking a little long in the tooth.

This morning at least there are tentative signs that yesterday’s initial reaction to the situation in Ukraine may have been overdone with the Yen reversing gains, so USDJPY which had run down towards the 101.00 level is a little higher trading at 101.35 and gold has given back some of its gains, trading at 1312 at the time of writing.  Investors will keep eyes firmly trained on not only Ukraine, but the Middle East where geopolitical tensions are also mounting continuing to shape investor sentiment.

Today is quiet in terms of economic data with only Canadian inflation and Michigan Consumer Sentiment being the major releases that could move the markets.  The Loonie has been one of the main beneficiaries of the dollar weakness in 2014 with USDCAD falling some 4.5% since its March highs.  July has so far seen a bit of a dollar comeback with USDCAD trading at 1.0750 and a softer Canadian inflation figure could give USD further momentum to test 1.0830.

Further reading:

USDJPY Looks Set For One More Leg Lower

Philly Fed Index leaps to 23.9 points – USD advances

US jobs data a focus going  forward

US jobs data a focus going forward

An element of risk off sentiment has knocked the equity markets overnight and is causing headwinds for indices this morning as the US ramps up sanctions against Russia by targeting individual firms.  The dollar however is not acting as its usual safe haven as it contemplates its next move having appreciated throughout the week, especially

Yellen gives dollar a helping hand

Yellen gives dollar a helping hand

Yesterday and overnight saw a little pick up in volatility as a number of events stirred traders into action.  UK inflation data was much higher than expected causing a spike in GBPUSD back above 1.7100 and EURGBP to plunge back towards 0.7900, then Yellen did her best to maintain her dovish stance on the US

Markets await Yellen’s two day testimony

Markets await Yellen’s two day testimony

Becalmed markets are just showing a few signs of life this morning with many dollar bulls expecting today to mark the start of the dollar’s very widely expected recovery. Janet Yellen will be making her first ever two day Humphrey Hawkins Testimony and the market will be listening carefully to see if her usual dovish

Calm before the storm

Calm before the storm

The week gets off to a very quiet start with little in the way of economic data out today which doesn’t help much with the overall lack of volatility as this continual sense of “calm before the storm” endures.  We’ve seen investors of equities become more nervous in recent days with increased calls for a

Impassive effects

Impassive effects

The remarkable thing about yesterday and also this week is just how little the single currency has reacted to a 4% correction in European stocks (Eurostoxx 50 index) over the past 5 sessions. The single currency is unchanged over this period and has held within a 60 pip range. Yesterday, there were echoes of days

Dollar gets little help from  FOMC

Dollar gets little help from FOMC

At least one FOMC guessing game ended last night after the minutes revealed that tapering will end in October with a final $15 billion reduction in asset purchases, rather than leaving the last $5 billion until December.  The usual caveat applies of course with the taper subject to economic conditions.  With the way the US

A decline in demand for risky assets

A decline in demand for risky assets

Indices plunged yesterday and investors sought safe havens such as the Yen as concerns over the up and coming earnings season have put a dampener on risk assets.  One of the best examples of why investors should be concerned is the FTSE 100 which for the fourth time in 2014 alone, has failed to push

The Aussie

The Aussie

After a good start to the month (strong employment report), the dollar has settled into a steadier tone so far during July.  On the cross rates, the most interesting move has been on EURGBP, with further lows for the year achieved yesterday as the tone to sterling remains ever resilient, despite recent gains. The focus

Dollar improvement

Dollar improvement

The rise in the dollar over the past few sessions has coincided with a rise in bond yields, with the 10Y now near the top of the 2.45%-2.65% range that has existed for most of the past 2 months.  In the wake of the stronger than expected employment report last week, there has been increased