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Video: Are FX Markets Reacting to Monetary Policy Speculation Rather than Risk?

Video: Are FX Markets Reacting to Monetary Policy Speculation Rather than Risk?

John Kicklighter, Chief Strategist

Talking Points:

• Though equities have rallied and volatility collapsed, sentiment trends has pulled limited weight in FX

• More market moving for the currency market currently is monetary policy speculation - hikes to stimulus

• We look at the Dollar, Euro, Pound and Yen to see gauge exposure to volatility

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A sharp swing for the S&P 500 has leveraged surprisingly little response from the FX market. Neither the safe haven US Dollar, troubled Euro nor funding-based Japanese Yen have experienced volatility anywhere close to what the traditional 'sentiment' benchmarks have seen, and even direction is proving divergent from day to day. While market-wide sentiment is a critical fundamental driver, relative monetary policy is still dictating activity level and bearings for many of majors. Where do the Dollar, Euro, Pound and Yen stand in the hierarchy of policy; and which is more sensitive to change going forward? That is the topic of today's Strategy Video.

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