China's government has been seeking advice from its think-tanks and policy advisers on how to counter potential trade penalties from U.S. President Donald Trump, getting ready for the worst, even as they hope for business-like negotiations.
World markets balked on Monday at the G20's decision to drop a decade-old pledge to resist trade protectionism, with stocks, the dollar, oil and the price of many major sovereign bonds all sliding into the red.
The week ahead will be full of FED speakers, international events and updates, economic reports, and political juxtaposition. Markets participant's will be looking for directional view points as it relates to the overall market technicals, the recent volatility in crude, and the impact of the USD volatility on its global counterparts.
The U.S. dollar is weaker against major currencies across the board after the Fed hiked rates for the third time since the financial crisis but lacked upgrades to the economic projections. A proactive but patient Fed with other central banks standing pat meant the forward looking forex market came away with a less hawkish view on future interest rates and sold the U.S. dollar.
That’s right… ‘Fecstasy’ is our combination term for ‘Fed’ and ‘ecstasy’, which seemed to grip the U.S. equities market after Wednesday afternoon’s FOMC announcement and follow up Chair Yellen press conference.
After a very quiet period in the forex markets, volatility spiked in midweek amid a flurry of central bank meetings. The Fed’s dovish rate hike on Wednesday caused the dollar to drop and the greenback has since drifted further lower with the Dollar Index dipping below the 100 level again. The other major central banks’ policy decisions were mostly in line with the expectations, although there was a bit of a surprise at the Bank of England with one MPC member voting for a rate rise.