US president Donald Trump's latest round of tariffs land squarely on Europe, Mexico, and Canada with the consequent slowdown in trade likely to reduce demand for oil and refinery products, and transportation fuels in particular.
Squawk / 26 August 2016 at 14:01 GMT
Head of FX Strategy / Saxo Bank
Yellen Jackson Hole Speech: First headlines to emerge are hawkish as they expressly address the need for rate hikes -> market not prepared for this. Yellen says Fed nearing goals on employment and inflation and the rate hike case has strengthened in recent months.
John J Hardy John J Hardy
"Ability to predict rate hike path quite limited" says Yellen - no surprise there. Indeed!
John J Hardy John J Hardy
Fuller assessment: Near term hawkish with long term uncertainty/dovishness. Yellen sendssignal that she wants the market to up the odds of another rate hike – making September more “live” than ever as she states that the US economy is nearing its goals on inflation and employment, making the rate hike case stronger. Theoretically USD bullish, but….Dec hike odds actually lower.

Longer term signals are less hawkish and more dovish as Yellen states that the Fed’s ability to predict the rate hike path is limited (no surprise there!) and that the Fed should consider buying a broader range of asset types if such a move is needed and she echoes the Williams idea on low neutral rates.

If the market draws the conclusion that the Fed is merely upping the odds of a rate hike or two to “Get it over with” and nothing else, there is little USD impact on the idea of being one- or two- and done. Risk appetite is an important coincident indicator (stronger risk appetite = weaker USD and vice versa).
Orgil Orgil
how about your USDJPY trade idea. Any changes?
John J Hardy John J Hardy
The USDJPY option we keep for post-BoJ, a bit more promising now that we once again steered clear of 100.00, though we need a decisive rally to gain further confidence.
John J Hardy John J Hardy
See my video up shortly as well - a bit more detail as I had a chance to read through the entire speech.


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