There were a couple of key events this week which emanated from Geopolitical developments and a particularly strong data from the US. The USD reversal was quite potent and as I have been expecting here on this blog, finally came to fruition. USD Index rose 2.50% over the week and market pricing for Fed Fund Rates saw repricing with expectations now firmly for 25 bps of rate cuts into the next policy and a 84% probability of another 25 bps of rate cuts into the December Policy. There is a 85% probability of FFR at the 3.25% - 3.50% range much above the 2.75% - 3.00% range priced at the end of last week. The pricing is now in line with the Fed's Summary of Economic Projections. The US2s10s bear flattened to close the week at 4.3 bps from 22.90 bps late Sep. The rounded bottom reversal in US2s could see the sell off extend to 4.10%. EURUSD faces immediate support in the 1.0920 - 1.0950 zone and if broken could extend to 1.0800. I see further strength in USDJPY towards 151.50 on...
The specific focus of the Blog is on Global and Domestic interest rates and currencies market. I look at fundamentals to define my bias and corroborate that with a study of price action to put on high conviction trades. The views and opinions are those of author and author alone. ~ Author: Vaishali Bagchi