Fundamental Analysis

Searching For A Spark

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The market has been searching for a spark this morning. No doubt dealers are suffering a mild case of Central Bank fatigue as the market remains in flux digesting last week’s “hawkish Fed hike “ amongst other central bank hawkish surprises. I suspect the dollar will be susceptible in both directions given that the impact of soft US economic data persists while clashing with an overly hawkish Janet Yellen

The greenback is mirroring US rates indicating room for risk to evolve as weak US economic data will raise a red flag about Fed policy normalisation running ahead of the curve. However given the light US economic calendar this week, Fedspeak will be far more entertaining with Dudley on Monday and Fischer on Tuesday likely to attract the most attention. The risk for the dollar would be for the Fed members to reign in some of the hawkishness from Dr Yellen.

But I suspect the European political narrative will remain in focus as Brexit negotiations will commence later today, mind you with much difficulty for UK negotiators given the weaker hand the Tories have been dealt post-election. How these negotiations evolve will likely hold the near term fate for the Pound

Local market awaits the MSCI decision on the China A Index.

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