Investors are pausing and reflecting today as US dollar traders shut up shop to celebrate Thanksgiving, meaning thin trading volumes in the US dollar will likely last to the end of the week. It has been an eventful week for US markets, with stock markets whipsawing and oil prices plunging. As well as this, some unexpectedly dovish comments from the Federal Reserve have indicated the interest rate hikes planned for 2019 could be put on hold. The turmoil caught one commodities-based US hedge fund off-guard, causing it to implode when natural gas prices sank through the floor.
Clients of OptionSellers.com woke up to find that not only had they lost all of their investments, but they were also liable for funds owed to a clearing broker and could face prison sentences unless they pay up.
The founder of OptionSellers.com, James Cordier, issued a tearful YouTube apology, although it may come as cold comfort to his clients with the average investor having lost between $500,000 and $1.5 million.
US based traders are now anxious about how further volatility could affect markets, with multiple crises seeming to converge on both the US economy and the wider global one at the same time.
In the other side of the pairing the pound is treading water today, with pound traders unwilling to make any sudden moves in light of Theresa May’s ongoing trips to Brussels to negotiate the final Brexit agreement.
But with German Chancellor Angela Merkel threatening to stay away from Sunday’s planned Brexit summit unless EU infighting ceases – in particular Spain’s complaint about the lack of resolution on Gibraltar and France’s insistence on continued access to UK waters for its fishing fleet – pound traders have adopted a ‘wait and see’ approach.
There is no data coming from either the US or the UK today that would drive sentiment in the pound US dollar pairing, so traders are left to focus on political risk factors.
Tomorrow could see some upside potential for the US dollar, however, as the latest Markit composite US PMI is due to be released.
Analysts are currently expecting to see a small improvement in November’s figures.