Might be posting here a bit more- will see how it goes.
Well what a week its been for the dollar- I did say the banks were bearish.
Lets have a think;
A) Chinese are going to stop buying bonds - this is really what killed the buck
B) QE tightening by the BOJ
C) PPI - a big miss
D) NFP miss on headline - wage inflation met expected (slowly moving up)
E) Some relief with core CPI beating estimates
Regarding the pound:
Everything is geared towards Brexit. May was talking earlier on about making bankers her priority for Breixt-
Then there were a couple of other stories coming out.
It just shows the importance of having a decent news feed.
But most importantly knowing what bit of information will have the most effect.
Also on the Euro last week there were some hawkish comments from the ECB and the pushed the EU higher.
CAD remains strong and the market have increased probability of a rate hike on the 17th Jan meeting and so it may be getting priced in already.
True the CPI was some relief on Friday but did provide the movement expected (probably not enough deviation), seeing as it is a key metric looked at by the Fed
But most importantly knowing what bit of information will have the most effect.
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This is definitely true. The importance of the Chinese bond buying shift did not stick out to me like it should have.
I think I need to get back to posting here more, too. However, I might sound like a broken record: I still don't get why the dollar is weak compared to these other currencies from a fundamental standpoint.
Nonetheless, that is why sentiment analysis has to be a major part of our strategies.
Fader, how are you playing the CAD rate hike? I am thinking about entering a trade with wide stops until we get close to the announcement. Seems like it should be a decent buy the rumor, sell the fact trade.
That's it sentiment - its so important. Its number one. It puts you in sync with the market.
If the market reacts neutrally to some good news - you know its bearish and vice versa
With the Chinese news item - even though they said that news item was really fake - it had no affect at all.
When they are in that mood - all they need is a release or someone to say something to dump it.
I remember after the New Zealand elections- price had pulled back a bit, but there was a speech by the new PM. It did not matter what she said traders were still going to sell- the speech was just the trigger. I think they had their fingers pressing the sell button as soon as she said "Hello"
Regarding the dollar, it's weird at the moment US wage inflation is going up as is core CPI- but everything is geared around the EU and other markets. All of these other issues (China, etc....) the market had not been factored in. Then on Thursday Bill Dudley says that the long term consequences of the tax cut are not good for the US.
Regarding the CAD - I need to look into it a bit more. He got a bit of a rollicking the last time he hiked.
Here is the last bit of the most recent statement
"While higher interest rates will likely be required over time, Governing Council will continue to be cautious, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation".
I would like to seek your views on the value of USD 3 months out from now.
Fundamentally, are we expecting further weakness or a rebounce in strength?
Is there a mispricing in the USD or are prices at fair value?
Hello everybody! I would like to seek your views on the value of USD 3 months out from now.
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synicz, in three months, I think the probabilities right now are higher that the dollar will be lower in 3 months. I laid out my arguments about the dollar in 2018 a few pages ago. Check out my posts. However, I don't have the conviction to enter a long-term trade right now. I am waiting for more guidance from the central banks.
What is your analysis based on the perspectives and insights Fader has offered in this thread? Let's get a discussion going.
{quote} synicz, in three months, I think the probabilities right now are higher that the dollar will be lower in 3 months. I laid out my arguments about the dollar in 2018 a few pages ago. Check out my posts. However, I don't have the conviction to enter a long-term trade right now. I am waiting for more guidance from the central banks. What is your analysis based on the perspectives and insights Fader has offered in this thread? Let's get a discussion going.
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I am a avid bull of the dollar.
IMO the dollar has been oversold and markets seem biased to the bear side. As seen in the few eventless days where the dollar keeps drifting lower on no news.
Then again, US is facing quite some risk with the govt shutdown.
Seems to me that markets are not expecting further hawkishness from the fed as well as expecting politics in the US to blow. Which quite an over-reaction to me.
In the long-term (>12 Months) , I am fairly confident that the USD will bounce back. But my expectations for the next 3 months is quite uncertain. You never know how much lower the dollar can go!
Not sure if I can really trade the CAD - so many ifs and buts and maybe's
If I was to go for it - jump on the back of a sell the news (assuming they hike)- but we need to see the market move in that direction (CAD- coming off)
Really - I think they won't hike- odds 70/30
Reasons- inflation expectations of business has dropped slightly, Poloz wants to see a hotter economy (Dec 14 speech), wage inflation is based on the new minimum wage, GDP growth has dropped over the last 4 months (except Dec).
Maybe it is now hotter and he has a reason to hike- 80% of banks think he will hike.
Remember this is Poloz not Carney
Not sure if I can really trade the CAD - so many ifs and buts and maybe's If I was to go for it - jump on the back of a sell the news (assuming they hike)- but we need to see the market move in that direction (CAD- coming off) Really - I think they won't hike- odds 70/30 Reasons- inflation expectations of business has dropped slightly, Poloz wants to see a hotter economy (Dec 14 speech), wage inflation is based on the new minimum wage, GDP growth has dropped over the last 4 months (except Dec). Maybe it is now hotter and he has a reason to hike-...
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Hi Fader,
I have the same opinion. Expectation is very high for the hike. However I find these expectations and surveys pretty inaccurate, not representing broad markets. Last seven days and last 24 hours CAD is the worst performing currency, while from the beginning of the year just USD is worst. Therefore market is not so confident in hike.
You are right that Poloz is not Carney. Poloz said that he wouldn't prepare markets for changes in the policy like other central banks do.
I am not saying that the rate will not be increased, but market is not convinced. Me too.
{quote} Last seven days and last 24 hours CAD is the worst performing currency. You are right that Poloz is not Carney. Poloz said that he wouldn't prepare markets for changes in the policy like other central banks do.
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I completely agree. After the initial spike from the employment numbers, CAD's price action wasn't what I expected. We haven't even mentioned the fact that oil hit $70.
I think that my natural instincts are to think about the market from an analysts' perspective. I am too csught up in making predictions. I am trying to train myself to think more like a trader.
