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Forex: Focus on GBPUSD Tuesday as Panic Cools Pre-FOMC

Forex: Focus on GBPUSD Tuesday as Panic Cools Pre-FOMC

John Kicklighter, Chief Strategist

Talking Points:

• The fear that evolved from an Emerging Market capital flight last week seemed to settle Monday

• With the FOMC decision due Wednesday, investors may postpone their decision to deleverage

• Keeping an eye on risk trends, 4Q UK GDP tops the list for event risk in the upcoming session

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Traders should keep vigilance for sudden swells in fear, but Monday's uneasy calm suggests the market will hold back its panic for bigger milestones later this week - like Wednesday's FOMC decision. The capital flight from Emerging Markets has stabilized through the opening session of the new weeks in the face of crisis management steps from various policy officials. Yet, this balance is an uneasy one. Investors in mainstream 'risk' assets were shaken, and the circumstances surrounding the market's performance to this point is becoming more apparent. Meanwhile, we have definitive event risk in the upcoming session - the top catalyst being the UK's 4Q GDP release. We discuss the big picture and volatility events ahead of us in today's Trading Video.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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