Week 4: Mon 28th Jan - Fri 1st Feb
Summary: The defining catalyst of the week was the FOMC tilting further to the dovish side in its updated policy statement. US stocks surged and the VIX dropped. Bond markets rallied, sending yields to the lowest levels in weeks as well as pressuring global interest rates. Gold prices firmed and USD softened as many contended the ‘Powell put’ had been resurrected and in all likelihood the Fed had finished raising rates. This improved sentiment was helped by constructive high level US/China trade talks. Friday saw strong payrolls and ISM Manufacturing data.
Markets: GBP was the weakest ccy, extending its slide on weaker manufacturing activity. EUR remains under pressure on weaker economic activity and Draghi's recent comments. The commdolls performed well, with AUD given a boost by manufacturing PMI. CAD was one of the few currencies to extend its gains versus the greenback and that is mostly due to the continued recovery in oil prices. USD closed the week near flat, after recovering Thurs and Fri on strong payrolls and ISM Manufacturing data. Overall, the Fed's putting rates on hold and emphasis on 'patience' should keep downward pressure on USD.
In other markets, crude and gasoline prices jumped after the US announced sanctions on Venezuela.
House Performance: Ours Newsflow trades have performed well in Jan at +2R for members. Wednesday's FOMC rounded off a good month as USD fell on Powell's comments and the majors rallied against USD for best part of an hour.