Talking Points:
• Friday's NFPs has reinforced an undercurrent of market speculation of an impending Fed hike
• Monday would see more follow through on the moral hazard pinch from the S&P 500 rather than USD's 12-year high
• Trend for the Dollar and 'risk' should remain the focus through pauses in volatility
See how retail traders are positioning in the majors in your charts using the FXCM SSI snapshot.
The Dollar's progress Friday was dramatic. The biggest daily swell in 7 months would clear a 12-year high. It's fundamental drive originated from one of the key concerned listed by the G20 and IMF: the global implications of Fed tightening. And yet, despite the attention and the perceived scope of the development, the Dollar wouldn't follow up with immediate momentum after the weekend. Risk trends would take the second phase forward with US equity benchmark S&P 500 turning its persistent six-week trend short of a record high. Yet, here too, the intensity does not match the depth to the fundamental driver. Hesitation shouldn't surprise anyone in these markets as complacency is as sticky as disinflation. Yet, the underlying change is already in motion. Keep an eye on the big picture as market participants grow more fatalistic about their excessive exposure. We look at the stop-and-go momentum versus key fundamental developments in today's Trading Video.
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