Trading Video: Next EURUSD, USDJPY and SPX Moves Require Greater Conviction

Talking Points:

• The divergence in monetary policy presents the greatest potential for EURUSD, GBPUSD and USDJPY trends

• GBPUSD and the Pound face the most concentrated event risk next week on the BoE's Quarterly report

• Risk trends may not be active now, but be wary of their influence over the FX and capital markets

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The US Dollar top five-year highs this week and US equity indexes have forged yet another record high. Despite this unusual correlation and the uneven fundamentals behind it, the market seems comfortable with momentum. Or does it? When venturing into record territory as the S&P 500 is doing on tepid volume or confronting major technical boundaries after fundamentals are largely discounted as with EURUSD near 1.2200, the next stage requires a deeper sense of conviction. For equities, yen crosses and other risk-sensitive assets; that would mean we need a uniform and purposeful reach for returns. To extend the Greenback's run, a simple advantage in its rate bearings needs to escalate to definable speculation of rate hikes in the foreseeable future. Can the market clear these hurdles next week? We discuss that in the weekend Trading Video.

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