Winter holidays means Volatility is back
As we enter the holiday season, I anticipate heightened market volatility driven primarily by short-term traders, who will likely prioritize technical indicators over fundamental factors. The influence of fundamentals on price action is expected to become more pronounced in January.
The market's focus will shift to Federal Reserve Chair Powell's remarks on recent Jobs data. While the headline figures appear positive, there are concerns about the underlying structure, with a notable prevalence of precarious employment situations, such as individuals working multiple jobs to meet financial obligations.
On October 23rd, the 10-year Treasury yield reached an elevated 5.041%. This level is deemed excessive for an economy managing a nearly 38 trillion-dollar debt. Powell is likely to exercise caution in adopting a hawkish stance, mindful of this debt-servicing challenge. However, maintaining rates at 4.2% may be overly pessimistic for an economy with a sustained longer-term approach to interest rates. The forthcoming bond auction is anticipated to be intriguing and potentially volatile, with expectations that rates will stabilize around 4.5%.
Powell's past intervention in the market during a period of declining Dollar and rising 10-year yields, influenced by concerns about servicing debt at 5.041%, suggests a nuanced approach in the upcoming Federal Open Market Committee (FOMC) meeting. While I anticipate a relatively uneventful FOMC meeting, the market may experience moderate volatility, leading to a generally flat trajectory for the remainder of the year.
While forecasting remains inherently challenging, my speculative projection for the EURUSD exchange rate by the last working day of the year, around December 22nd, is approximately 1.08
The market's focus will shift to Federal Reserve Chair Powell's remarks on recent Jobs data. While the headline figures appear positive, there are concerns about the underlying structure, with a notable prevalence of precarious employment situations, such as individuals working multiple jobs to meet financial obligations.
On October 23rd, the 10-year Treasury yield reached an elevated 5.041%. This level is deemed excessive for an economy managing a nearly 38 trillion-dollar debt. Powell is likely to exercise caution in adopting a hawkish stance, mindful of this debt-servicing challenge. However, maintaining rates at 4.2% may be overly pessimistic for an economy with a sustained longer-term approach to interest rates. The forthcoming bond auction is anticipated to be intriguing and potentially volatile, with expectations that rates will stabilize around 4.5%.
Powell's past intervention in the market during a period of declining Dollar and rising 10-year yields, influenced by concerns about servicing debt at 5.041%, suggests a nuanced approach in the upcoming Federal Open Market Committee (FOMC) meeting. While I anticipate a relatively uneventful FOMC meeting, the market may experience moderate volatility, leading to a generally flat trajectory for the remainder of the year.
While forecasting remains inherently challenging, my speculative projection for the EURUSD exchange rate by the last working day of the year, around December 22nd, is approximately 1.08