TGI-F traders! Asian equities were positive overnight, as the FOMC minutes revealed a more dovish tone than market participants had discounted, and the Vix below 20 for the third day in a row. Furthermore, some FOMC members were apparently “afraid of losing credibility” if they raised rates prematurely. It seems that external factors (China & EM) are weighing more than Yellen admits. Kocherlakota even said that the Fed should go negative (!) adding that a rate hike would be appropriate only in 2017. Of course, the USD has weakened even more on these comments, and Crude is pushing higher again.
Today we have the UK Trade Balance (expected -10 Bln vs -11.08 prev.), US Import/Export prices (expected -0.5% and -0.2% respectively, vs. -1.8% and -1.4% prev.), CAD Employment Change (expected 10K vs 12K prior) and unemployment rate (expected to drop to 6.9% vs 7% prior), and finally FOMC’s Lockhart (which many economists want to hear).
I think it might be easier to play equities today given the risk recovery (US indices are probing last month’s highs already), and also because we have travelled quite a lot already on the currency pairs most useful to play the short USD theme (like GbpUsd, NzdUsd, AudUsd). So no fresh positions today for me in FX.
Charts for Today:
ES (S&P MINI)