Following two days of rangebound moves, where Monday’s modest market rebound was undone by the Tuesday just as modest decline (despite the early surge higher on the latest “bullish for stocks” European terrorism), overnight equity action continued to be more of the same, and as of this moment S&P 500 futures were unchanged, while European stocks were modestly higher. But while equities remain surprisingly uneventful despite loud warnings by both JPM and Goldman now that another bout of volatility and equity downside is coming, in FX there has been a substantial change, one which has seen the US dollar rise for a fourth day, the longest winning streak in a month, driven by the latest round of hawkish Fed jawboning courtesy of the Chicago Fed’s Charlie Evens yesterday, which in turn has pushed down prices of oil, gold and copper.
As noted earlier by Bloomberg, the greenback gained against almost all of its major peers, with only the Japanese yen keeping pace, after a Federal Reserve official commented on the interest-rate outlook. This is in line with a warning issued by JPM yesterday, according to which selling of USD is about to fall out of vogue as it heads for worst month since 2011. The bank said hedge funds cut bets on further gains in dollar to the lowest since 2014 prior to last week’s Fed meeting, and with speculators having already ditched the U. S. currency, few are left to sell and push it down further, making greenback less susceptible to outflows of hot money. The last 4 days appear to have confirmed just this.
This post was published at Zero Hedge on 03/23/2016.