A Few New Themes Running Through FX Markets Today

There are a few new themes running through FX markets today in the aftermath of the apparently successful coup in Thailand and the political turmoil in Hungary. The concern now is that these political developments will put emerging market currencies on the defensive, driving-up traditional safe-haven currencies, typically the Dollar and Swiss Franc. More pessimistically for Dollar bears is the interest rate outlook, where at today's FOMC meeting, most expect to see the bank pause once again, and signal that inflation is largely under control. This eventual loss of rate support would seemingly favor the Euro, however, there is quite a lot being written about how a coming U.S. slowdown will crimp European growth, just as it was getting started. Read More....