That Was Volatile!
Yesterday saw a hugely volatile day on the markets as currency pairs swung wildly and volatility was at a level not seen for a long time.
The initial cause of the volatility was the US Dollar. After having positive results for such a long time retail sales data came out much worse than expected and this was particularly highlighted in New York where business conditions decreased and manufacturing activity fell to its lowest level since April. This led to broad based Dollar weakness across the board but many other factors then contributed to cause the markets to fluctuate wildly.
This hiccup in the US recovery is causing traders to worry that the much heralded interest rate hike is not as nailed on as was previously expected. Indeed, it looks like the expected date has been moved out to early 2016. Recently much has been made of global economic growth and how this is affecting everyone. Fear seems to be gripping the market. Germany, which was once single-handedly holding up the Eurozone is struggling and as a result the Eurozone is finding it difficult to get out of the mire. Where can Draghi go next? Japan similarly is struggling and China’s growth is dragging its heels. In the UK, we seem to be doing ok. But, the drop in inflation is due to Sterling appreciation and falling oil and commodity prices around the world.
Everyone is looking at each other and worrying at the moment!
Today, we are a bit quieter datawise but we still have CPI from the Eurozone and jobless claims from the US. We also have a variety of speeches from Fed members which could be interesting and provide an insight into what the current thoughts are.