FX Update: Narrow ranges have been prevailing amid a restive mood
FX Update: Narrow ranges have been prevailing amid a restive mood in global markets. Hopes for more central bank stimulus have been winning out in equity markets, for now, though this is juxtaposed by fears that a number of major economies are simultaneously heading for recession, with a number of developing-world economies with high dollar debt levels are particularly exposed to the shifting financial cycle. Given these fears, further conciliatory remarks are likely from both China and the U.S. with regard to their trade spat, which may help maintain investor spirits. The concern will remain, however, that the course to recession may be becoming self fulfilling, given record debt levels and the impact that flattening yield curves on bank lending levels. In the mix of news today is North Korea, which test-fired more missiles today while dismissing South Korea calls for talks, while tensions in Hong Kong remain a potentially destabilizing issue for Asia. Among the main currencies, EUR-USD has settled near the 1.1100 level, consolidating losses seen yesterday following firmer than expected U.S. retail sales and productivity data, which tipped the balance of Fed versus ECB easing expectations a little. USD-JPY has settled around the 106.00 mark, which is roughly the midway point of the choppy range that's been seen over the last couple of days. The pound has continued to hold up, and is set to post its first up week against the dollar after four consecutive down weeks and its first up week versus the euro out of the last 15 weeks, suggesting an equilibrium of sorts has been reached following a prolonged phase of underperformance.