Trading news and sentiment with technical analysis

I like your postings EcoTrader, keep 'um going...........

I'll be back, i am currently very busy and haven't had much time for trading. Hoping to get it out the way this week.

potential trade. EUR fundamentally still very weak with the ECB yesterday offering no change in direction and still mentioning risks tilted to the downside. A break of this level and i will be looking to take a short

still waiting for a clean break

short triggered

also short euraud AUD central bank were not as dovish as expected and yesterday a CB speaker (can't remember the name) said they are going to wait and see and are hopeful the data will pickup. EU as mentioned on the other trader is weaker

out both +15 (waiting for US PPI + CPI data and don't want to be stuck in a trade that could go belly up if data is bad)

US data beat expectations

long usdcad (weaker oil and strong us data)
short eurusd (weak eu sentiment + strong us data)

both trades are pure fundamental news flow trades - no technicals

closed eurusd for 1 pip loss (no movement in it and my trade management strategy signalled a close). Leaving the other open for a bit longer

was in a meeting so couldnt reply , got out of the cad trade for about 3 pips before it blew through the entry zone

The importance of really getting a good handle on central bank policy, you need to emerse yourself into their world. If you are not aware, central bankers speak all the time. Go take a look at todays calendar. They will upload transcripts and you should be having a read. You can get a link from fx factory calendar and they don't take long to read. Here is an example from today


St. Louis Fed's Bullard Discusses Successful Normalization, With Challenges Ahead
4/11/2019
Tupelo, Miss. – Federal Reserve Bank of St. Louis President James Bullard discussed “A Successful Normalization, With Challenges Ahead” on Thursday in a presentation at the Community Development Foundation of Tupelo.
Bullard began by noting that the Federal Open Market Committee (FOMC) indicated at its most recent meeting that, if the economy evolves about as expected, the current level of the policy rate—the federal funds rate target range—will be appropriate through 2019. The FOMC also announced the Fed’s balance sheet reduction program will end this autumn.
“These events mark the end of monetary policy normalization in the U.S.,” he said. “The campaign has been largely successful: Nominal short-term interest rates have been raised from near-zero levels, and the size of the Fed’s balance sheet has been reduced as the economic expansion has continued.”
While normalization has come to an end, the conduct of monetary policy has not, Bullard pointed out. “The FOMC may elect to adjust monetary policy going forward, but any such adjustments would be in response to incoming macroeconomic data and not part of an ongoing normalization strategy,” he said.
Challenges Ahead
Bullard went on to discuss the macroeconomic challenges facing the FOMC during 2019. Particularly, he pointed out that the FOMC may miss its inflation target on the low side in 2019 based on current readings of market-based inflation expectations, following seven years of inflation mostly below target.
Bullard also noted that the U.S. labor market is performing well, but feedback from labor markets to inflation is very weak. Furthermore, he said, “the Treasury yield curve has flattened significantly, and a meaningful and sustained yield curve inversion would send a bearish signal for the U.S. economy.”
Market-Based Inflation Expectations Are Low
Bullard pointed out that the FOMC has a stated inflation target of 2 percent. “An important component of monetary policy is to be able to keep the actual inflation rate close to the target,” he explained. “In this quest, inflation expectations are both an important theoretical variable and also an important market-based evaluation of current monetary policy.”
The FOMC has missed its personal consumption expenditures (PCE) inflation target for much of the period since 2012, Bullard noted. “Market-based measures of inflation expectations suggest that financial markets believe the FOMC will again miss its PCE inflation target to the low side in 2019 and, indeed, for the next five years,” he said.
Feedback from Labor Markets to Inflation Is Weak
Bullard noted that many have argued that inflation is coming because labor markets are strong. He explained that U.S. monetary policymakers and financial market participants have long relied on the Phillips curve—the correlation between labor market outcomes and inflation—to guide monetary policy.
“However, these correlations have broken down during the last two decades, so they no longer provide a reliable signal,” Bullard said, pointing out that policymakers have to look elsewhere to discern the most likely direction for inflation.
“It is no longer enough to merely cite strong labor markets and simply assert that inflation must be around the corner,” he said, adding that theoretical Phillips curves may still exist, even when empirical Phillips curves have disappeared. He noted that this is a key issue for central banks in the modern era.
Meaningful and Sustained Yield Curve Inversion Threatening
Bullard then discussed U.S. yield curve issues and consequences of inversion. “A meaningful and sustained inversion of the Treasury yield curve would be a bearish signal for the U.S. economy,” he said.
An inversion would suggest that financial markets expect less inflation and less growth ahead for the U.S. economy than does the FOMC, which influences the short end of the curve, Bullard explained, adding that inversions have been associated with recessions in the postwar U.S. data.
“To be sure, yield curve information is not infallible, and inversion could be driven by other factors unrelated to future macroeconomic performance,” he said. “Nevertheless, the empirical evidence is relatively strong. Therefore, both policymakers and market professionals need to take the possibility of a meaningful and sustained yield curve inversion seriously.”
Conclusion
The normalization of U.S. monetary policy has come to a close at an appropriate point, Bullard concluded. “Going forward, the FOMC may adjust monetary policy, but any changes would be in response to incoming macroeconomic data and not part of an ongoing normalization strategy,” he said.
The FOMC faces challenges, Bullard added, in that inflation expectations remain somewhat low and parts of the Treasury yield curve are inverted. “These market-based signals indicate that the FOMC needs to tread carefully going forward in order to sustain the economic expansion,” he said.
Contact Us
Laura Girresch
[email protected]
Office: 314-444-6166
Cell: 314-348-3639
James Bullard
St. Louis Fed President and CEO

https://www.stlouisfed.org/~/media/I...15px.jpg?la=en

James Bullard is president and chief executive officer of the Federal Reserve Bank of St. Louis. In these roles, he participates in the Federal Open Market Committee (FOMC) and directs the activities of the Federal Reserve’s Eighth District.

 

1. Speeches, Presentations and Commentary

Now ask yourself what have you learned about the fed?

A neutral fed with low inflation prospects is likely going to weaken the dollar and the trend for this has already begun Take a look at todays tell tale signs. We had beats on the data pointing to a stronger economy than estimated and the dollar hardly moved. If I were a swing trader I would be starting to assess potential pairs that would

A) provide me a positive rollover
B) has the fundamentals in place and if the central bank there is on a hiking program, you will have a monster trade.

Keep an eye on the yield curve inversion story and keep note of the time when it began.

"Since 1956, equities have peaked six times after the start of an inversion, and the economy has fallen into recession within seven to 24 months."

short usdcad

https://www.forexlive.com/news/!/lib...ction-20190412

Just reading the conclusion made me think that it was overall dovish in tone. Is this the right way of thinking about it? :d

Not so much dovish but just neutral. The US economy is in a good place. But all this being said unless there is data that can shift the fed into tightening, then there is scope for the $ to lose some of its strength and if the data starts to soften further then that pace could accelerate. Yesterday was a sign with good US data not providing much of a reaction.

out +19

long eurusd

https://www.forexlive.com/news/!/eur...ected-20190412

+ softer $

closed, price stumbling here and i am not hanging on, can enter again at a better price

looking at long nzdusd on the back of superb Chinese data last night

The Chinese link is important as they account for a massive proportion of global GDP but to be specific, the data, along with other recent prints, shows the PBOC stimulus is having a positive effect. This is positive for risk assets like AUD and NZD