Strategy Video: A Global Financial Market View of the Fed
• The Fed policy decision this week will exact a direct influence over the US Dollar
• The 'relative monetary policy' aspect of FOMC speculation led to sizable moves but is a 'mature' theme
• Far more potential for this event resides in its influence over the balance of speculative appetite
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An eight month rally for the Dollar is testament to how important the monetary policy forecast is to the FX market. It also speaks to a well-adjusted market. While the market certainly hasn't priced in the full extent of a tightening regime for the Greenback - especially in contrast to the moves the Fed's peers make - considerable 'hawkishness' is already priced in. In contrast, the broader financial system's sentiment balance has adapted little to the implications of a tightening shift from the US central bank. Will the ECB, BoJ and others easily offset a shift in direction from the US central bank? Will FX volatility continue to take off while other markets hold steady? Or will the US prove once again a catalyst - like it was in 2008 - for global speculative positioning? We discuss the Fed's 'big picture' implications in today's Strategy Video.
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