Equities around the globe continue to rise as speculation of fresh rounds of QE circulate through the markets with risk on sentiment in full swing. The USD, CHF and JPY have taken a hit as funds flow from the relative safety of these currencies to more risky assets. Asia has seen the biggest risk on sentiment with equities continuing aggressive gains as the JPY tanks on imminent expectations of an announcement of additional stimulus from the BOJ.
We expect any news to the contrary to have adverse effects on markets, as the longer it takes for the speculations to come to fruition the more likely markets will begin to wobble as we see fear set in and profit taking commence in a classic buy the rumor, sell the fact sell off. Most notable is gold which has remained neutral in the risk off environment, remaining stable despite the new risk sentiment, which may be an indication that markets are currently over reacting to the possibility of a stimulus.
Also coming up today and tomorrow are important days form the UK`s perspective as we see BoE Gov speak today in what probably will be a guideline how the bank intends to move in its upcoming interest and QE votes in the wake of the BREXIT vote. He has already said that the BOE will likely lower rates and increase QE, now it remains to see by how much and how exactly they intend on doing it.
Today’s Key economic releases are as follows:
- BOE Gov Carney speaks
- FOMC Member Bullard Speaks
- Jolts Job Opening expected at 5.74M
- RBNZ Assis Gov McDermott Speaks
- Trade Balance expected at 320B