Dollar and Equities Equally Exposed to Fed, GDP and Risk Trends
• Risk trends steadied through the end of the past week - resetting the market's speculative position
• Ahead, the docket fills out with a range of rate decision headed by the FOMC and 4Q GDP figures anchored by US
• Monetary policy and risk trends will vie for influence, but it will be important to 'diversify' with these themes
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The market's throttled back on the panic that 2016 would simply accelerate into a blind panic and deleveraging frenzy. A rebound from equities, Yen crosses, commodity currencies and oil has offered breathing room; but it certainly does not reverse the course of sentiment that we've seen shift over the past year. Heading into the coming trading week, the financial system will be put right back to the grindstone with key events and data scheduled - and of course we cannot discount an unanticipated return to the more sentiment-derived themes. Aside from the unforeseen from China, energy markets and speculative positioning; we have a range of central bank rate decisions and key 4Q GDP reports due. Of course, the most headline-friendly of these listings will be the FOMC decision on Wednesday and US GDP on Friday. The tension is unbearable, and it will important to find trade opportunities in the path of the event risk as well as those that are unaffected as possible (I have taken a EURGBP trade). We discuss the busy week ahead in this weekend Trading Video.
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