Volatility in the markets is very likely to continue and even increase in the coming months. This could provide many profitable opportunities to the savvy trader.
Geo-political risk is moving to the forefront of investors’ minds at present and is guaranteed to be increasingly influential in decision making for the remainder of 2016.
We have the imminent Brexit referendum taking place on 23rd June; since its announcement on 20th Feb we have seen high volatility in Cable with the pair swinging wildly within a range of just shy of 700 pips between 1.45139 and 1.38359.
The ongoing US Presidential campaign is of course rumbling on and coupled with mixed signals by the Fed with regards to its monetary policy, specifically the potential for and timing of future interest rate hikes, the market is unsure if the recent USD strength is likely to continue or not.
We have the release of the Fed minutes this evening so further light could be shed on this aspect then.
The Chinese economy continues to underperform and in the last couple of days Greece has once again come to forefront following a recent leak suggesting the IMF could be planning to deliberately prolong debt negotiations with them until the country is close to running out of money; a point which IMF Managing Director Christine Lagarde vehemently denied.
With all this in mind, we are in for interesting market moves this year. It could result in investors putting their weight behind so called safe havens like Gold and judging by its strength in the last couple of days, JPY too. The BoJ’s monetary policy project is still in full swing and following the comments by the Japanese Prime Minister Shinzo Abe that countries should avoid trying to weaken currencies with ‘Arbitrary intervention’, USDJPY is still within striking distance of 109.92, its lowest level since October 2014.