Matt Weller

The debate over Theresa May’s Brexit deal is careening toward a dramatic conclusion ahead of the scheduled Parliamentary vote on Tuesday.

The minutes from each Federal Reserve meeting are released three weeks after the meeting itself, meaning that they’re generally stale under the best of circumstances...

Generally speaking, US traders have been focused on the other side of the Atlantic this week, with particular attention on the continued Brexit drama and the mostly as-expected ECB meeting. With those situations (at least temporarily) behind us, the market’s eye has shifted back stateside in advance of next week’s highly-anticipated Federal Reserve meeting.

The March Non-Farm Payroll report will be released tomorrow at 8:30 EST (13:30 GMT) with expectations centered on a headline print of 206 after last month’s strong 242k reading. Unfortunately, due a quirk in the calendar this month, the NFP report will be released before two of the most reliable indicators, the ISM Services and Manufacturing PMI figures. Therefore, the notoriously difficult-to-handicap release will be shrouded in even more uncertainty than usual this time around. That said, the leading indicators that we do have in hand still point to another decent report: during the NFP survey week, initial unemployment claims were essentially unchanged relative to last month at a historically low level (259k), while yesterday's ADP Non-Farm Employment report came out in-line with expectations  at 200k.

As we noted yesterday, market volatility was expected to pick up as we moved through the week as the top-tier data releases and traders at their desks gradually ramped up. Today we’re getting our first look at that phenomenon, with Federal Reserve Chair Janet Yellen making some waves at her speech to the Economic Club of New York.

It’s been an exceedingly slow start to the week with most of Europe out of the office for an extended holiday weekend, but trade is starting to pick up modestly heading into the US session.

Many traders are already looking ahead to the holiday weekend, so it’s difficult to expect much volatility from the remainder of this week’s trade, but there’s one key technical formation to keep an eye on both tomorrow and heading into next week.

Despite a weak-but-still-better-than-expected retail sales report out of the UK and a smattering of second-tier US data, yesterday’s global market trends have generally carried over into today’s trade: the US dollar is edging higher, commodities (prominently including oil) are falling, and global equities are edging lower once again.

The dollar remains the currency market’s standout performer for the second straight day, gaining value against each of its major rivals after this morning’s as-expected New Home Sales report. Despite consistent strength in the greenback each day this week, the world’s reserve currency is still down from its pre-Fed levels of last week, so it’s difficult to draw any conclusions about the sustainability of the current move, especially due to the lower liquidity pre-holiday conditions.

By now, you’ve no doubt heard about today’s horrifying events in Brussels, and we wanted to start by saying that our thoughts go out to the bombing victims and their families. Not surprisingly, today’s events have overshadowed the traditional day-to-day movements of the markets and are leading to a big risk-off move in global equities, as well as safe haven demand for assets like gold, as my colleague Fawad Razaqzada noted earlier.

With markets essentially trapped in near-term stasis as traders wait for higher impact data, it’s a good time to take a step back and look at the longer-term technical picture on AUD/USD. For more than a year, from mid-2014 to mid-2015, the Aussie consistently lost value against the greenback, dropping more than 2,500 pips in the process.

Markets are off to a ponderous start to the week as theres been essentially no new data to digest over the weekend. Global equities, fixed income, and currencies are all essentially unchanged across the board and with no major economic releases on tap for today’s US session (beyond the second-tier Existing Home Sales report at 14:00 GMT), the slow trade could continue throughout the day.

Military analysts often draw a distinction between “hot” wars, which involve armed military conflict between nations, and “cold” wars, where enemy factions use economic and political means to jockey for an upper hand against their rivals. While we feel the term “currency war” is a bit overhyped by the media, the recent easing actions by the world’s most powerful central banks make the cold/hot currency war analogy too perfect to ignore. As the war heats up, we’re seeing how effective each central bank’s “weapons” (policies) are on the actual “battlefield” (the market).

At the start of the week, we highlighted today’s Swiss National Bank meeting as a potential under-the-radar event risk that many traders were overlooking. As we suspected, the central bank did not make any changes to monetary policy, but did take the opportunity to reiterate its review that the Swiss franc is “still significantly overvalued.” For Switzerland’s heavily export-oriented economy, the value of the currency is one of the most important economic indicators, and the lack of upward pressure on the franc after last week’s ECB easing allowed the SNB to remain on hold. Indeed, in more plain language than many other central banks, the SNB vowed to continue intervening in the currency market if the franc should start to strengthen again, noting, that it, “will remain active in the foreign exchange market, in order to influence exchange rate developments where necessary.”

As we noted in yesterday’s FOMC Preview report, any Fed fireworks wouldn’t come from the monetary policy decision per se, but rather how today’s meeting shaped the conversation around the timing of the next rate hike in the coming months. As of writing in the midst of Yellen’s presser, it’s been the monetary policy doves who are flying high, rather than the hawks.

The world’s most widely-traded currency pair has garnered its fair share of headlines over the last week, but heading into this afternoon’s monetary policy announcement from the Federal Reserve, EUR/USD could be poised for another big move.

Last week and this week mark an unusual confluence of central bank meetings; Already this month, we’ve heard from the Bank of Canada (on hold), Reserve Bank of New Zealand (cut rates to 2.25%), European Central Bank (enacted a suite of easing measures), and Bank of Japan (on hold) and before the week’s out, traders will get the latest updates from the Federal Reserve, Bank of England, and Swiss National Bank (all of which are expected to leave policy unchanged, though the SNB meeting could be interesting as we noted yesterday).

The theme of today’s European session trade was undoubtedly risk aversion, with every major European equity bourse losing ground, bond yields generally rising, and oil losing another 2+%  thus far. As often happens in markets though, the big catalyst for today’s trade is not what most traders were expecting.

It’s a busy time of the month for central bankers, and the BOJ will be the first major central bank to draw traders’ attention this week.

It’s been a quiet start to what promises to be an extremely active week for global traders. As of writing ahead of an all-too-early, post-daylight-savings-time US open, European equities are trading generally higher, bond yields are edging lower, oil is off by over 2% from Friday’s close, and the US dollar index is regaining some of last Thursday’s losses. In case you haven’t checked your calendar, this week will feature a number of top-tier central bank meetings including the latest updates from the Bank of Japan (tonight), Federal Reserve (Wednesday), and Swiss National Bank (Thursday), so market participants may be somewhat hesitant to put on large positions in the early part of the week.

It’s been a harrowing trip for global markets today, and ECB President Mario Draghi was the conductor.

First traders were impressed by the size and scope of the ECB’s aggressive actions to ease monetary policy, but the market’s collective view shifted to dismay when Draghi later indicated that further rate cuts were neither anticipated nor needed. As my colleague James Chen noted earlier today, “While not as disappointing as December’s under-delivery of easing actions, the press conference essentially amounted to a forward-looking disappointment due to Draghi’s relatively strong comments regarding future rate cuts.”

After massively disappointing traders’ high hopes back in December, “Super” Mario Draghi and company were not going to make the same mistake again. Expectant traders and analysts were looking for the ECB to cut its deposit rate by 10bps and increase its quantitative easing program by €10B per month, but the so-called “whisper numbers” were even more aggressive than that. Regardless, the ECB busted out its big bazooka at the conclusion of today’s monetary policy meeting, enacting a series of aggressive proposals.