FX comment: That was the (quiet) week that was
Strange I should think of this week as a quiet one when there appeared to be plenty going on. Saturday’s announcement of the renminbi revaluation, Tuesday’s UK budget, Wednesday’s FOMC...
But most of these events were really non-events for news: Monday’s knee-jerk reaction to the Chinese move was seen for the sideshow it is; the budget, while severe, contained no surprises; as for the FOMC, nothing was what we expected and nothing was what we got.
That’s not to say that there weren’t things happening in FX: implied volatility is still quite elevated; the move in EUR/USD up to (just shy of) 1.2500 on Monday and down to 1.2200 by kick-off in the England-Slovenia match was notable; GBP/USD continues to threaten 1.5000 resistance largely on the back of more hawkish MPC minutes; and we are back to a risk-off scenario – EUR/JPY once again threatens 110 support. But it still feels bitty and I don’t think it is all World Cup related.
Sources in hedge fund sales tell me: “It’s surprising how poor the results are for a lot of firms given the big moves in euro and Asian currencies this year”. And: “Clients have gone quiet after recent volatility – markets are too choppy to trade.