Risk is the Word at the end of the month

The current trend of trading between risk on/risk off remains in place as can be evidenced by the recent tight ranges seen in the major currency pairings.Risk is the Word at the end of the monthThis is in spite of August’s turbulence with both major financial and geo-political events hitting a thin market.

Today however, there is some decent stuff from the US to analyse, specifically the minutes from the last FOMC meeting, hard on the heels of Ben Bernanke’s speech last week at Jackson Hole and ahead of Friday’s employment numbers release.

The Dollar traded slightly stronger ahead of the FOMC minutes, but weakened following their release. Details from the minutes revealed that several members had favoured a more substantial move for adding further stimulus than the announced pledge to keep rates at current historic lows until mid 2013.

A range of tools were discussed and it was generally agreed that a further tranche of quantitative easing remained an option although a decision was made that this route was not appropriate just yet.

Today’s US Chicago PMI release could weigh on market risk appetite following a series of disappointing confidence indicators in August.

Another weak outcome this afternoon could see the Dollar reap some benefit if risk appetite fades.

We are also scheduled to get the ADP employment report today from which the market will likely try and gauge, normally with very little success, the probable outcome of the US payrolls data due out on Friday afternoon.

Sterling has been trading weaker over the past few days, admittedly on very little input, following its surge in value earlier in the month on safe haven gilt buying.

Data remains soft and given the almost inevitable weakening of Sterling on the last trading day of any month, it looks as though we are again going to see the Pound’s value depressed.

1 Comment

  1. Cristine Feltes says:

    I’ve done a lot of research and reading on this topic recently. Your article is the only one that makes sense. I’ll come back again.

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