{"id":111403,"date":"2017-08-21T06:45:16","date_gmt":"2017-08-21T10:45:16","guid":{"rendered":"http:\/\/countingpips.com\/?p=111403"},"modified":"2017-08-21T06:28:13","modified_gmt":"2017-08-21T10:28:13","slug":"politics-central-bankers-under-investors-radar","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/08\/politics-central-bankers-under-investors-radar\/","title":{"rendered":"Politics & Central Bankers under investors\u2019 radar"},"content":{"rendered":"
August 21, 2017<\/div>
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Article by ForexTime<\/a><\/p>\n

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Less than a month ago the CBOE volatility index, known as the best indicator of fear in the markets, dropped to a record low of below 9. The declines were a result of steady equity markets, low trading volumes, and optimism that the markets were heading higher. \u00a0This has all changed in the past two weeks- the fear index rallied from a low of 9.52 to 17.28, an 81% spike in 4 days from Aug 8 to Aug 11. This was precipitated by rising tensions between the U.S. and North Korea. These tensions lasted for a couple of days, then eased after both sides backed down. However the calm didn\u2019t last long, as President Trumps\u2019 response to the Charlottesville clash, saw business leaders exiting his advisory councils, and a number of high profile Republicans criticizing and distancing themselves from the President.<\/p>\n

The departure of Trump\u2019s Chief Strategist Steve Bannon, mainly seen as pushing protectionist policies, was not unexpected and it was slightly positive for markets, causing U.S. stocks to rally on Friday, but the market ended near lows.<\/p>\n

Politics have clearly taken the front seat, and another shock will likely lead to a further selloff in equities. Some investors might see the recent fall in prices as an opportunity to buy the dips, but given that valuations are still very high compared to historical averages, many will hold off until seeing meaningful fiscal policy change. Trump\u2019s administration will be tested as we get closer to hitting the U.S. debt ceiling. According to the Congressional Budget Office, the debt limit should be raised by mid-October, to avoid defaulting on loan payments, but this time it doesn\u2019t seem a done deal.<\/p>\n

Given that the economic calendar doesn\u2019t hold tier-one data this week, investors and traders will be focusing on the Jackson Hole central bank gathering on 24-26 August. The two stars of the gathering will undoubtedly be Mario Draghi and Janet Yellen. The most recent minutes from the Fed and ECB, shows that inflationary pressures remained absent, despite declining unemployment. When looking at bond yields across the globe, investors seem to be convinced that inflation isn\u2019t returning anytime soon. However, financial asset prices are worrying central bankers, especially the Fed, which sees valuations as elevated.<\/p>\n

With ECB\u2019s meeting scheduled on September 7, Euro traders are waiting for signs from President Draghi as to when the central bank will start trimming QE. The single currency managed to overlook ECB\u2019s minutes, which revealed that Euro strength is becoming a concern for monetary policy makers. If Draghi does not disclose his plan for tapering QE, the Euro might fall towards 1.16, but I would prefer buying the dips then selling the rallies, as the ECB have no other choice but to tighten policy.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer:\u00a0<\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime Less than a month ago the CBOE volatility index, known as the best indicator of fear in the markets, dropped to a record low of below 9. The declines were a result of steady equity markets, low trading volumes, and optimism that the markets were heading higher. \u00a0This has all changed in […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-111403","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=111403"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111403\/revisions"}],"predecessor-version":[{"id":111418,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111403\/revisions\/111418"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=111403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=111403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=111403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}