Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Fed Spreads Calm; Sterling Looks Robust

By City Index (Ken Odeluga)Stock MarketsMay 24, 2018 13:38
Fed Spreads Calm; Sterling Looks Robust
By City Index (Ken Odeluga)   |  May 24, 2018 13:38
Saved. See Saved Items.
This article has already been saved in your Saved Items


A calming influence from Federal Reserve minutes that revealed no hawkish surprises, prevails.

Market looks past the backtrack

Backtracking in U.S.-China trade discussions continued to disorient global shares and the dollar on Thursday after the White House opened a new front, floating possible tariffs on car and truck imports.

FOMC meeting minutes that dampened prospects of a ‘bonus’ fourth hike in 2018 though, took the edge off risk aversion. The adjustment prevailed at time of writing. U.S. futures were tentative, though off early lows. Germany’s DAX was down a tenth of a percentage point, somewhat dragged by news of Deutsche Bank’s latest attempt to restructure.

Britain’s FTSE crept around but not far beneath the flat line too; France, Spain and Italy were up 0.2%-0.5%. The seemingly ad-libbed administrative style of Trump’s White House applied to international trade remains an effective ‘risk-off’ trigger, edging gold, yen and Swiss franc higher, and JGBs and Treasurys off recent lows. But the market is still prioritising the rates outlook.

Yen bid softens

The apprehensive yen safety bid that ensued on Trade developments was intact at the time of writing, though had softened. The first rise in four months of a Japanese manufacturing gauge supported the yen.

South Korea’s finance ministry noting its economy was on track for 3% annual growth as the Bank of Korea saw fit to hold rates for a sixth straight month, despite downside inflation pressure, added to positive Asia sentiment. Overall, the impression of shallower dollar longs bailing was more plausible than the beginnings of a more far-reaching correction for the greenback.

After a dollar high of ¥110.10 in Asia, attention is now on ¥109, given almost exact daily tagging by the rate there late last month, ahead of new cycle highs.

Sterling looks robust

The snapshot of sterling against the dollar gave a more robust impression than the trend since mid-April. The rate was already firmer before stronger-than-forecast UK retail sales data, to which the market tends to apply a discount. With the $1.33 range low intact, the upswing now targets short-term moving averages, for instance the 10-day MA, around $1.34. A close above $1.3467 would open room to $1.3482, previously busted support which should now pose resistance. The second reading of UK GDP on Friday is the nearest fundamental watch point for sterling. Forecasters do not foresee changes from the initial growth estimate of 0.1% compared to the fourth quarter and 1.2% year-on-year in Q1.

Mattarella’s warning

The euro’s bounce was among the least convincing, short of Wednesday’s $1.1789 high. The backdrop is that whilst Italy’s benchmark yield has trimmed some of its ascent since early in the month it held on to around 70 basis points of the move. The country’s administrative president offered the coalition’s prime ministerial choice a mandate on Wednesday evening.

The focus now shifts to 5-Star/League’s choice for economy minister. The president’s office pointedly noted a veto could be deployed in the event of a Eurosceptic appointee. The suggestion is that the coalition may have to compromise, whilst Giuseppe Conte—PM designate with no political or management experience—is shaping up to be a figurehead. Still, ample room for further flare-ups in Italian asset markets remains, for the foreseeable future.

U.S. existing home sales were the only remaining data release of note on the calendar.

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Original post

Fed Spreads Calm; Sterling Looks Robust

Related Articles

Fed Spreads Calm; Sterling Looks Robust

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email