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Evans

EUR/USD falls to new 20-year lowThe euro is in negative territory today, after posting six straight days of losses. EUR/USD is trading at 0.9553 in Europe, down 0.41%. September can't end fast enough for the euro, which has declined a massive 4.8% against the dollar. Earlier today, EUR/USD fell to 0.9536, its lowest level since June 2002. With the war in Ukraine escalating and Nord Stream reporting that its pipeline was deliberately damaged, it's hard to be optimistic about the euro's outlook. The sham referendums in Russian-occupied Ukraine have ended and predictably, the vote to join Russia was close to 100%. Moscow is expected to declare on Friday that the territories are being annexed to the Russian Federation, sparking fears that Russia could resort to nuclear weapons to defend what it claims is Russian territory. There was a further escalation in the Ukraine war last week, as explosions at the Nord Stream 1 and 2 pipelines are suspected to have been sabotaged. Nord Stream 2 has been shelved and Nord Stream 1 has been shut down for weeks, and any faint hopes that Russia might renew gas exports through Nord Stream have been dashed. European natural gas prices have jumped in response to the news. The US dollar continues to rally, and 10-year Treasury yields pushed above 4.00% earlier today, for the first time since 2008. The markets are showing a healthy respect for Fed hawkishness, even after inflation weakened in the past two inflation reports. There is some optimism that the current rate-tightening cycle is reaching its end, with Fed member Evans stating that it will be appropriate to slow the pace of tightening at some point. For now, the US dollar has momentum, driven by an aggressive Fed and weak risk appetite. EUR/USD is testing support at 0.9554. Next, there is support at 0.9419 There is resistance at 0.9640 and 0.9711
by OANDA
DXY/ USD - FED YELLEN, MESTER & EVANS SPEECH HIGHLIGHTSUSD has traded relatively flat following the slew of Fed speakers in the past 8hrs - despite Dec Fed Funds steepening aggressively from <50% implied probability to 56% probability of a hike. Perhaps more interestingly though, is that a fed hike has never happened in the past unless fed funds have priced 50% and recently we have traded below this figure which makes the December hike somewhat less than certain. From here USD positioning looks tight/ flat, there isnt much directional bias imo given one hike this year is unlikely to drive USD higher (which is the most likely outcome) - thus bets against the fed is where any real alpha will lie (given a fed hike in dec is unlikely to give the USD a boost). We are well behind this years expectations and i think this may even weigh on the December likelihood. Has the Fed lost their trigger finger is perhaps the most important question, closely followed by trumps ability to make a valid run for the presidency, where both have risks assymetrically skewed to the downside.. thus imo its fair to say the USD future is fairly bleak. Equities remain stubborn on the Feds accomodation, and now the USDJPY 100 target has been hit imo EUR$ and GBP$ longs on dips make sense; particularly into 1.295 (a continued tactical trade) where the brexit political uncertainty i feel is massively overpriced already (along with future BOE easing limited here whilst data holds up) - hence taking advantage of these "shock dips" for 100-200pips has/ is paying wel. Whilst he ECB/ FED divergence driver is alot flatter than was anticipated earlier in the year as the fed becomes structurally more dovish and the ECB more hawkish. Fed Yellen: Fed's Yellen: U.S. Banking System is Well Capitalized Fed's Yellen: 'Loan Growth is Picking Up, and Problem Loans' are Down Fed's Yellen: Largest, Most Complex U.S. Banks Will See 'Significant Aggregate Increase in Capital Requirements' Fed's Yellen: Fed Will Raise Big Bank Capital Requirements Through Stress Test Changes Yellen: Fed Will Continue to Work to Tailor Oversight to Riskiness of Banks Yellen Calls for Regulatory Relief for Small Banks Yellen Backs Small Bank Exemption From Volcker Rule Yellen Testimony Rehashes Previous Regulatory Positions Yellen Calls for Regulatory Relief for Small Banks Yellen: 'No Fixed Timetable' For Raising Rates Yellen: Congress Could Allow Fed to Purchase Equities as Possible Future Monetary Policy Tool Yellen: Have 'Never Been Pressured' By Obama Administration on Monetary Policy Yellen: 'Very Much Hope We Can See Greater Diversity' on FOMC Yellen: Labor Force Participation Rate Dropping Due to 'Aging of the Population Yellen: 2% Inflation Target 'Not a Ceiling' Fed Mester: -Wanted September rate hike due to Fed's progress on jobs and inflation mandate and expectation of further progress -Not raising rates risks steeper policy path later on, which could cause recession -Raising rates now will prolong US economic expansion -Policymakers should not discard past, think this time 'completely different' -Says fundamentals of US economy remain sound US economy has shown it is resilient to shocks -Says she expects US economic growth at or above 2 pct the next two years, inflation to return to 2 pct target -Says expects weak business investment to pick up with further US economic growth -Says labor market at full employment, expects it to continue to tighten
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by QuantumLogicTrading