With markets still in "what next?" mode, what will get them moving
Traders always need a theme, something to trade towards. Central banks are top of the pile as all roads from the fundamental indicators lead to them. Politics is another but there's often too much crap among the potential price moving stories to rely on a trade in normal times, and usually political events are few and far between.
The US and Fed has just come off a massive period of extreme monetary policy. If there's one thing to take from last week's hike it was that US monetary policy is back to normal. The Fed isn't fighting a crisis, it's not entering or exiting new monetary policy, it's getting back to what central banks should be doing week to week, month to month, and that's calmly guiding an economy through inflation, strength and weakness (and probably preparing for the next crisis). For some of you, you probably don't know what it's like to trade normal Fed policy as we haven't done that for nearly 10 years now, and there's still some banks (ECB & BOE) who need to start getting back to normal. What that means is that unfortunately, the days of 1000 pip moves on Fed expectations are over. We've had three hikes and the optimism before them has evaporated when they pushed the button on each hike.
With traders coming off a big week last week, they're looking for the next bone to chew on for that medium-term trading fix, so what do you think it might be?
A June Fed hike?
The ECB?
The BOJ and policy?
Brexit negotiations?
More politics? (US/France/Germany)
None of the above and something else?
Answers below as usual.
Which door is the next big trade behind?
