Fed Leaves Risk Trends to the Wolves, Dollar Ready to Move
A rebound in risk trends (and subsequent drop for the safe haven dollar) this month represents either an improved outlook or expectations of extracurricular support. Considering growth outlooks have steadily deteriorated alongside rates of return, it would seem the burden is on central banks to pony up support or risk a collapse in ill-supported sentiment. Therein lies the rub. Fundamentally questionable risk players like EURUSD, AUDUSD and the S&P 500 are still elevated after the Fed decided to stop at an extension of Operation Twist. The immediate reaction is reserved, but the cumulative outlook paints a concerning picture for risk - and bullish view for the dollar.
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