We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • #Gold prices may fall while the US Dollar gains even as economic policies championed by the Trump administration invite inflation. Get your $gld markets news from @IlyaSpivak here:https://t.co/4lHhHsby56 https://t.co/zF4EyLIRWM
  • Lessons from Bretton Woods are forgotten, the US-China #tradewar represents a true existential threat to the post-World War II international trade order, and in turn, the globalized economy that has grown out of the ashes of history. More from @CVecchioFX :https://t.co/paaBxX6Xt0 https://t.co/tcjkQnaBWl
  • What are the truths and myths of #forex trading? Find out from @DailyFX analysts here: https://t.co/uF75VPzstr #FOMOintrading https://t.co/bDXG2dV3wG
  • The US Dollar technical outlook against the Euro, British Pound, Australian Dollar and New Zealand Dollar are discussed. Large wicks left signs of indecision, will reversals follow? $EURUSD $GBPUSD $AUDUSD $NZDUSD - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/12/15/US-Dollar-Technical-Outlook-EURUSD-GBPUSD-AUDUSD-NZDUSD.html?CHID=9&QPID=917702 https://t.co/dpuIppxo3F
  • What are some trading mistakes @nickcawley1 made during his career and what did he learn from them? Find out: https://t.co/y3cckNW22W https://t.co/vUQyVl6b0e
  • Growth linked currencies have gained as investors hope for progress on the trade front as well as stimulus from the Fed. The global economy however remains depressed and seems likely to remain so. Get your market update from @DavidCottleFX here: https://t.co/jt1HH9AHLM https://t.co/Yz65AMJYlm
  • RT @YuanTalks: #China temporarily suspend additional tariffs of either 10% or 5% on some #US goods scheduled to take effect on Dec 15, said…
  • The gold-silver ratio is simple. It is the number of silver ounces you would need to trade to receive one ounce of #gold at current market prices. Find out how you can use this in your trading strategy here:https://t.co/kh5DZvv5ib $XAUUSD https://t.co/eJGODpfTNc
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 https://t.co/DoVBd1l1oO
  • #Silver is a precious metal commodity that investors use as an inflation hedge and safe-haven asset. Find out what are some strategies and tips to trade silver here: https://t.co/k4tVcFuwxW #CommoditieswithDailyFX https://t.co/zXCSmH2HLX
Fed, ECB, Other Central Bank Balance Sheets May Tip Risk Trends

Fed, ECB, Other Central Bank Balance Sheets May Tip Risk Trends

2017-04-07 23:45:00
John Kicklighter, Chief Currency Strategist
Share:

Talking Points:

  • Extreme accommodation through monetary policy helped to promote risk appetite alongside more virtuous economic growth
  • While the Fed's rumination of a plan to work off its $4.5 Tln holdings grabbed attention, others have started as well
  • As with rates, relative balance sheet adjustment can offer FX opportunity; but it can also redefine broad risk trends

See how retail traders are positioning in the majors using the DailyFX SSI readings on the sentiment page.

Monetary policy lost much of its overwhelming influence in the years between the Great Financial Crisis and through the opening half of 2015. Yet, this fundamental theme may cycle back to the forefront in the weeks and months ahead as the conversation changes. The discussion around central banks' foray into the market is changing. Previously, the amplitude for the market was found in relative engagement: a growing disparity between dovish and hawkish bearings amongst the majors. That yields massive rallies for the Yen crosses from 2012 to 2015, an impressive rally for the Dollar from 2014 to 2015 and collapse for the Euro from 2014 to 2015. While there will remain motivation to rise and fall at the advantage/disadvantage of counterparts moving forward, that is not worth the true amplitude will originate.

The last impressive move in the scales of monetary policy arguably comes from EUR/USD. For the ECB, late to the game with quantitative easing, the early warning of a stimulus program promoted a sharp decline for the shared currency starting in mid-2014. The same anticipation at the other end of the spectrum motivated the Greenback to rally as the promise of hikes set bulls out to get ahead of the wave. Yet, by the time the ECB implemented it QE program and the Fed secured its first hike; the pair had relegated itself to a broad range. Having hit extremes, the gaps were narrowing and opportunities fading. With other central banks banking off their extreme drive to QE-their-way-to-recovery coming to an end, all shifted to a neutral stance at basement level rates. Yet, in this collective position, we incurred a much more prolific reality whereby a global pursuit of return translated into extreme risk taking.

There was little choice by investors over the years other than to expose themselves to greater risk. Whether using notional leverage or moving into riskier assets, the absolute absence of meaningful yield meant market participants had to to accept ever greater risk for even meager returns. That seemed an acceptable trade off with volatility deflated in the market. Yet, that stability was established through the precarious and ultimately limited support of central banks. The monetary policy authorities couldn't keep playing the role of unlimited buyer and provide the capital gains necessary to offset the lack of income/dividend/yield. And, that eventual moderation seems to be at hand. Though a slow change, it will be an enormous one for the global financial system and will lead to considerable movement. We discuss why we should be more mindful of global monetary policy in this weekend Trading Video.

To receive John’s analysis directly via email, please SIGN UP HERE

Fed, ECB, Other Central Bank Balance Sheets May Tip Risk TrendsFed, ECB, Other Central Bank Balance Sheets May Tip Risk TrendsFed, ECB, Other Central Bank Balance Sheets May Tip Risk Trends

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

DISCLOSURES

News & Analysis at your fingertips.