Strategy Video: Will NFPs and the RBA Move Markets More than the FOMC?

Talking Points:

• Event risk can generate volatility and change the course as well as momentum of trends

• First we need to determine if the data is 'important' and then assess if traders must reposition

• We discuss the short and medium-term reactions to the FOMC decision, RBA decision and Friday's NFPs

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Will Friday's NFPs and this morning's RBA rate decision struggle to generate volatility and momentum like last week's FOMC policy update? What determines how market-moving event risk will be? The first step to determine whether an event or data release will move the markets is to gauge whether it is important to the markets. Relative monetary policy has proven one of the most productive fundamental drivers for the FX market the past six months. From there, the reaction is determined by what portion of the market will have to reposition to account for the new information. 'In-line' readings require very little change while major 'misses' or 'beats' can generate large scale changes in positions. We discuss this practical fundamental question using current event risk in today's Strategy Video.

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