Last week we could perfectly see how "Sell rumours, buy facts" work. Well, for now we´ve only seen the "Sell rumours" part...
US Dollar index climbed from the lows of the week after testing the uptrend line and, after the verbal intervention of one of the FED voting members, SPX500 index plunged.
Obviously, many people talked about the intervention and few noticed that there was another news from the FED behind: the Countercyclical Capital Buffer or CCyB. The details can be found on one of the links below. When this is implemented, the basic outcome is that the banks will may find difficulties on buying bonds at the emerging markets and junk bonds. In search of profitability, emerging markets and junks experiencing an impotant bounce this year, so CCyB will basically drop the risk/reward level below the reasonable limits.
The reaction to this was a clearly risk-off: indexes dropped and I expect oil , gold , Euro and GBP to follow next week. Many will run into the US Dollar before the next FED meeting.