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Forex Strategy Video: Grading EURUSD, USDJPY, GBPUSD by Monetary Policy

Forex Strategy Video: Grading EURUSD, USDJPY, GBPUSD by Monetary Policy

2014-01-07 22:37:00
John Kicklighter, Chief Strategist
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Talking Points:

• While risk-based swells carry the greatest threat to volatility, monetary policy is a enduring FX driver

• There is a broad spectrum in the perception of dovish (RBA, BoJ) to hawkish (GBP, RBNZ) central banks

• Where a currency stands on the curve and where it is heading is a key gauge of potential trend

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Many fundamental FX traders are simply waiting for a sharp move in risk bearings before they take a trend trade. Yet there is another theme that is playing out now and can prove even more persistent. Monetary policy. While the majority of the major central banks are currently implementing dovish policy regimes, their bearings - and more importantly, the market's perception of their bearings - are changing. Using a chart of the central banks' and currencies' relative positioning in the monetary policy world; we look at the fundamental trade potential between the dollar, euro, pound, Aussie and yen in today's Strategy Video.

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