August FOMC

People are going to sell the dollar, as the august FOMC meeting approaches, sell on rumor and buy on fact. You will see the dollar trend lower and profit taking will occur once the spike occurs that day, the moves with counter the news the following days.

Hi, Spectre2006,

Im not sure what you mean. Can you explain better ?

Thanks

Given this past weeks testimony by Bernanke, the market is reading it as if they are going to pause on Aug. 8th. So the trend will be bearish for USD, if the moves are significant enough in pairs, profit taking will occur even before FOMC meeting, to lock in gains. When the announcement is made that they are holding steady, you will see a dollar bear spike, the news gets factored into the market that the FOMC has paused finally. The dollar bear spike might continue for a few sessions but wait for it to be exhausted, so the price action up to the meeting will give clues in terms of market participants positions. Then the more profit taking will occur to whipsaw back to dollar bear trendlines to take out stops on dollar bear trades. Then a resumption in the dollar bear trade will occur.

Spectre,

I agree with your conclusion regarding the bearish dollar, although our reasoning differs somewhat. Back on July 8th, I wrote the following responding to MrMikal in another thread on Forex Factory, in the aftermath of July's NFP and the incredibly "wrong" numbers issued by ADP:

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So to me the question is, what purpose was served by releasing the lower number (how could ADP be sooooo wrong)? And as you corrrectly point out, unemployment remain unchanged. Thus the government's picture is painted that: (1) implies a "better economy"; and (2) infers lower-than-expected inflation and stable employment resulting in a "weakened" dollar in the FX world.

As for purpose, living in the "capitol of the free world", we see politics as the wrist if you will, connected to and guiding the market's invisible hand. I'm willing to go on record today that July's PPI and CPI will surface what's possibly underneath the numbers confirming our "better economy". Accordingly, inflation is in check and thus no rate rise from FOMC on August 8th. Why? 2006 elections loom near and too much tightening is not a good thing at that time of year.

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Thus far, my prediction is on track. The government wants us to believe inflation is in check. Even though the so-called "headline CPI" rose in July, the government points out that the so-called "core CPI" remained steady. Talk about double-speak. As you point out, Bernanke is hinting that there'll be no rate rise and the dollar bears came out of hibernation during his senate testimony (I believe cable moved 100 points that morning).

In conclusion, based on your erudite analysis, combined with what I wrote on July 8th, I firmly believe the bearish trend for the dollar will continue.

Just information; not a recommendation.

Thanks to both guys.
This makes sense to me also.

But Im much better in trading ranging markets and news, I think I'll be out for a while.
I dont want to get long in something which I dont know exactly when will reverse in this moment.

Would have been good to be in since the beginning of bullish pound

Follow your system Trucco, best not to force a trade.


Chris