 Fed's dovish turn occupied a lot of head lines last week. Stocks were lifted while Dollar was pressured. However, the moves were not as drastic as they could seem to be. There was no upside acceleration in stocks. Treasury yield actually dropped at the long end, indicating that expectations on inflation and economy had not turned despite Fed's patience stance. Meanwhile, Dollar index is just extending recent corrective pull back, also without downside acceleration. The rally in AUD/USD and decline in USD/CAD were more due to rise in iron ore prices and oil prices. Over the week, Sterling was the weakest one as Brexit enters a new chapter. Within a few days, the UK government might be ready to unveil what alternative proposal on Irish border backstop they have, to persuade EU to reopen withdrawal agreement negotiation. Swiss Franc was the second weakest. And Dollar was just the third weakest. Australian, Canadian, and New Zealand Dollar were the strongest in order. |
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