Talking Points:
- Event risk was light the past 24 hour session and Fed Chair Yellen decided to leave rate and Dollar views alone
- A delayed vote on the US healthcare reform adds to concern that other growth-oriented policy will not proceed fluidly
- Top event risk ahead includes global PMIs, Fed speak and critical meetings (EU, PBoC, OPEC) scheduled after the close
See how retail traders are positioning in the S&P 500 and Dollar-basd majors using the DailyFX SSI readings on the sentiment page.
Neither US equity indexes nor the Dollar have suffered the kind of momentum that was threatened through the volatility that started the week. On the technical side, the boundaries are clear. For the S&P 500, the steadfast post-election bull trend was broken. For the DXY Dollar Index, the 'neckline' of a very prominent head-and-shoulders pattern still holds the bottom for troubled bulls. Whether on the passive or action side of the key technical level, however, trend rests with the fundamental motivation the is offered the market. We have yet to see the skeptic-ridden complacency of the past months tip into necessary deleveraging. But then again, the market doesn't seem to keen to just throw caution to the wind again.
This past session, the docket held a few opportunities in event risk to seize upon for volatility or even the long-shot trend. None would fulfill their speculative potential. The RBNZ rate decision left the benchmark rate unchanged for New Zealand and the outlook for an eventual turn to tightening was kept sufficiently vague so as not to confer value against more aggressive doves like the ECB and BoJ - much less outright hawkish leaning groups like the Fed. Fed Chair Janet Yellen was scheduled for a speech which had many high alert given the FOMC's hike last week and the intensified speculation over the central bank's next moves since. She would not deign to weigh in on such a flashpoint topic though leaving the Dollar stuck to its support.
Generating a little more traction was the top headline for the day. News that the US House of Representatives would delay a vote on the contentious ACHA health bill troubled investors. There are economic implications as to whether this piece of legislation passes, but it is impact that reaches beyond the current market's short-term focus. The real concern arises from the delay that this poses for more immediate, growth-oriented policies like the tax reforms and infrastructure spending touted by President Trump. The particular run of strength in the markets since the US election stands as testament on what expectations have been set in speculative positioning. Ahead, Congresses road block will continue to weigh, but scheduled event risk will also make an appearance. Global PMIs, speeches by more vocal Fed speakers and a round of important meetings on key topics (EU leaders on European troubles, PBoC Governor on trade, OPEC and non-OPEC members on oil supply) are all penciled in. We discuss what the final session of the week holds in today's Trading Video.
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