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Forex pairs in this Article » GBP/USD
FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec believes that the Fed tapering process is providing more market instability at present than ongoing EM weakness.

Key Quotes

"Asian markets suffered heavy falls this morning, with Hong Kong traders coming back from New Year’s celebrations to be greeted by a sea of red. At the same time we find GBP/USD below 1.6300 this morning hovering perilously close to the key 1.6260 which if breached, could signal a further move lower."

"There are a number of different reasons why we are seeing such 'risk off’ sentiment, particularly in emerging markets, but the main focus is on the withdrawal of liquidity by the Federal Reserve as the central bank believes the US economy is showing sufficient signs of recovery to reduce the pace of their QE program.”

Emerging Market currencies continued to weaken as the capital inflows these countries had been benefitting from continue to dry up, exposing the huge investment bubble that had been created in economies that were always vulnerable to a reversal."
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