Weekly Market Outlook: Fed’s dovish decision triggers risk rally

Last week’s calendar was central bank heavy. The dispersion of central banks strategies clearly signals the growing complexity in managing the idiosyncratic aspect of each nation’s economic situation, within the context of challenging global backdrop. We expect the lull in currency wars is coming to an end.

The highpoint was the FOMC which provided an unexpectedly dovish accompany statement and press conference. The Fed is playing a game of chicken with global growth, yet we anticipate the Fed remains overly optimistic in realizing the global slowdown. The Feds shallower rate path triggered a broad risk-rally in equities, commodities and all-things EM. 

The political crises in Brazil reached a new high, yet the prospect of change, propelled the BRL higher. As widely expected the SNB remained in wait-and-see mode on policy but downgraded growth and inflation outlook. Norges bank cut rates in reaction to soft growth due to low oil prices; the move was aimed at debased in the NOK.

Finally, Peru central bank held off increasing rates despite elevated inflation as copper prices have rallied and higher interest rates would encourage PEN appreciation.

This white paper provides analysis for major and emerging market currencies. The paper explores the future trends of the financial industry and discusses the recent risk rally in equities and commodities.