• BOE rate hike odds for the September 21st meeting stand at 87.3%
• The VIX index trades above 16, to the highest levels in two months
• FX Volatility starts to pick, Canadian dollar index rises to nine-month high

Wall Street is watching a global bond market selloff get uglier as US stocks waver ahead of massive earnings from Apple and Amazon. A lot of economic data confirmed how resilient the US economy remains. Both initial jobless claims still remain low and the ISM services employment component supports the argument that the Fed might need to deliver more tightening in November.

The global bond market selloff extended and the British pound weakened against the US dollar as the BOE decided to only go with a quarter-point rate rise. FX traders thought the statement was rather dovish but sterling reversed losses after BOE Governor Bailey expressed concerns about service inflation.  With only 2 MPC members voting for a half-point rate rise, the market is growing confident that the BOE might only have two quarter-point rate rises left. 

After hitting a one-month low, GBP/USD is in this awkward position as the BOE seems easily positioned to deliver more tightening than the Fed, but that could be followed by a stronger economic performance by the US economy. Now the FX market might view the risk of more tightening as bad news for a currency, as monetary policy should already be at restrictive levels.  

The global bond market selloff could also rattle markets and lead to strong safe-haven flows towards the US dollar and Japanese yen.  If the greenback remains bid, GBP/USD could see downside momentum target the 1.2600 region.  To the upside, the 1.2825 level provides initial resistance.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

• SEO Powered Content & PR Distribution. Get Amplified Today.
• PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
• PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
• PlatoESG. Automotive / EVs, Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
• BlockOffsets. Modernizing Environmental Offset Ownership. Access Here.
• Source: https://www.marketpulse.com/fundamental/global-bond-market-selloff-extends-after-boe-signals-more-tightening-ahead/emoya