KEY FUNDAMENTAL THEMES RIGHT NOW
GBP Volatility Incoming: Brexit Trade Talks
A big influencer for GBP and volatility will start to pick up pace over the coming weeks. The U.K. will now need to start negotiating with the E.U. on its trade deal.
Risk Appetite: Optimism Of US-China Deal Signing
U.S. President Donald Trump said that the first phase of an American trade deal with China would be signed on Jan. 15 at the White House
Markets have been in favour of riskier assets and its peers; AUD, NZD, GBP, CAD, thanks to U.S. - China deal signing optimism. U.S. stocks were also helped to record highs.
Central Bank (FOMC) Action: USD Weakness
Since Mid-September, the Fed has been offering financial institutions short term liquidity to keep the market for short-term funding stable; the Fed has now flooded the market with roughly $260bln in short-term funds. Some have compared these operations with QE, indeed, all these extra dollars have been a contributory factor to recent dollar weakness.
North Korea Tensions May Flair
North Korean Leader Kim Jong Un was talking tough overnight; he said North Korea would no longer be bound by previous agreements to halt missile tests due to US/South Korean co-operation and that a new strategic weapon would be announced soon. It appears to have unsettled markets, with some further flow in Gold (XAU/USD). It is worth remembering, North Korean missile launches can move FX markets, particularly by spurring risk-off flows into safe-haven currencies such JPY.
To understand and stay on top of all market themes and how to implement into trades.