It’s a choppy day in the foreign exchange market, which isn’t unusual at month-end, particularly in a very volatile month.
The US dollar had been slackening in the last hour broadly but there is some life in stocks now and the dollar has rebounded. At the same time, the euro is particularly soft.
It’s tough to tie this back to newsflow as it as generally dovish today, which should hurt the US dollar. The market is taking a recessionary view with 132 bps in easing in the year ahead now priced in, compared to 125 bps yesterday.
At the same time, the market is trying to suss out what is coming in the trade war and there is no sign of a breakthough with China. That could happen fast but there is a line of thinking that it won’t happen unless stock markets go back to the lows. Today, Trump was telling Americans to ‘be patient’ which isn’t exactly comforting.
This article was written by Adam Button at www.forexlive.com.
