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  • #101
  • Edited 4:28am May 28, 2017 2:38am | Edited 4:28am
Quoting EcoTrader
{quote} Dollar has been weak off the back of geopolitical events and trump. Nothing about this hike has been priced in. You could even look at it as though the previous hike has been rolled back. There is a deviation of price and the underlying fundamentals. How long this holds out is anyone's guess. The $ is cheap at current prices though on a medium term outlook {image}
I had a look through the headlines rather than looking at the figures
(kids were playing up so did not give this my full attention!)
http://www.cnbc.com/2017/05/24/fed-s...ts-remain.html
"Economists maintain expectations for a June rate hike". Perhaps the terms fully priced in is too strong,

The dollar sold off following FOMC minutes, believe that this was a case of sell the news - it had been bullish going into the event as traders were looking for further clues on potential rates (which I feel may somewhat have been quashed)

Also looking through recent Fed members speeches Bainard's views which are known to most closely resembles Yellen's, had said that the global outlook was the brightest for years, although had wondered whether the US is at full employment.

My main thought is that there has been a drop on PCE for 3 consecutive months following the Fed hike
Also CPI is following a similar downward trajectory path.
Although average hourly earnings however are improving.
As I feel that Yellen is a dove at heart, she could well push back a rate hike and wait for inflation to reverse its current direction.
A further hike could well maintain the current direction of the PCE/CPI.

One thing to note is that the Fed members before the latest hike had forewarned us about a potential hike in rates.
This appears not to be the case at the moment.

Overall I think that the Fed will push the rate hike back (notwithstanding any strong NFP & CPI figures)
  • #102
  • May 28, 2017 3:54pm May 28, 2017 3:54pm
Quoting Fader123
{quote} I had a look through the headlines rather than looking at the figures (kids were playing up so did not give this my full attention!) http://www.cnbc.com/2017/05/24/fed-s...ts-remain.html "Economists maintain expectations for a June rate hike". Perhaps the terms fully priced in is too strong, The dollar sold off following FOMC minutes, believe that this was a case of sell the news - it had been bullish going into the event as traders were looking for further clues on potential rates (which...

The fed has said they are not going to hike until they see evidence of the slowdown being temporary. What's peculiar with their opinion here is that this isn't anything new. Gdp has averaged 1.1% in the first quarter since 2010 while the remaining quarters have averaged 2.2%. What's more curious about this is that they need to normlise rates before they begin balance sheet reduction and its widely believed that this is 1.25 to 1.50. They have been for warning about balance sheet changes for a while now and they need some wiggle room to ensure they don't start balance sheet work prematurely. With money being taken out the system we will see dollar appreciation but this could be softened by allowing long term securities roll off before short term securities which would have a far greater immediate impact on the dollar. I think we are going to be near the end of the equities bull cycle when tapering begins.
  • #103
  • Edited May 29, 2017 3:36pm May 28, 2017 5:47pm | Edited May 29, 2017 3:36pm
Quoting EcoTrader
{quote} The fed has said they are not going to hike until they see evidence of the slowdown being temporary. What's peculiar with their opinion here is that this isn't anything new. Gdp has averaged 1.1% in the first quarter since 2010 while the remaining quarters have averaged 2.2%. What's more curious about this is that they need to normlise rates before they begin balance sheet reduction and its widely believed that this is 1.25 to 1.50. They have been for warning about balance sheet changes for a while now and they need some wiggle room to ensure...
Gavyn Davies at the FT has written an article on the Fed which is quite interesting:

https://www.ft.com/content/b165f756-...f-74474f6538fa

Also I was looking through the statement and the minutes (rather than relying on memory for a change)

https://www.federalreserve.gov/monet...es20170503.pdf
https://www.federalreserve.gov/monet...20170503a1.pdf

In respect of QE the minutes indicated that the Fed were looking to do something this year (last page of the minutes)

"Policymakers agreed that the Committees Policy Normalization Principles and Plans should be augmented soon to provide additional details about the operational plan to reduce the Federal Reserves securities holdings over time. Nearly all policymakers indicated that as long as the economy and the path of the federal funds rate evolved as currently expected, it likely would be appropriate to begin reducing the Federal Reserves securities holdings this year."
  • #104
  • Edited 6:38pm May 30, 2017 4:52pm | Edited 6:38pm
There are certain polls that people should pay attention to - You gov is the main one.
Easiest pips you will ever make.
http://news.forexlive.com/!/uk-elect...osses-20170530
  • #105
  • May 31, 2017 3:17am May 31, 2017 3:17am
Quoting Fader123
There are certain polls that people should pay attention to - You gov is the main one. Easiest pips you will ever make. http://news.forexlive.com/!/uk-elect...osses-20170530
I find these yougov polls unreliable even though they claim over 90 percent accuracy. This latest poll for instance represents 0.003% of the population. There is nearly always an initial reaction which always makes me laugh at the silliness of the reaction contrasted with the sample size. I read somewhere about a journalist that did analysis on UK election polling going back 40 years. His analysis concluded that polls so far have missed the final margin by 6 percentage points. Personally I prefer to trade the other side of polls (after the initial reaction). Do you always trade the initial reaction?
  • #106
  • May 31, 2017 4:05pm May 31, 2017 4:05pm
Hi Eckotrader

I only trade the initial reaction on certain polls.
Its like trading an economic release (NFP) but there is more time to react.
With most economic releases certain news traders have their trading software set to react the split second a release is made.
But with polls you actually have time to trade it. As the time can't really be confirmed.
As with everything though it depends who releases the information, working out when they are going to release it, how much of a surprise it is
Bloomberg had some more information on this
https://www.bloomberg.com/news/artic...iss-a-majority
On balance perhaps I should have faded the move.
Perhaps the market is starting to discount YouGov
  • #107
  • Jun 1, 2017 12:01pm Jun 1, 2017 12:01pm
Quoting Fader123
{quote} I had a look through the headlines rather than looking at the figures (kids were playing up so did not give this my full attention!) http://www.cnbc.com/2017/05/24/fed-s...ts-remain.html "Economists maintain expectations for a June rate hike". Perhaps the terms fully priced in is too strong, The dollar sold off following FOMC minutes, believe that this was a case of sell the news - it had been bullish going into the event as traders were looking for further clues on potential rates (which...
I see that Bainard (who is a dove) has basically said that she will be voting for a hike in rates soon (June?)

http://news.forexlive.com/!/brainard...ember-20170530

Also PCE beat expected
ADP was excellent today
NFP tomorrow - the estimates for me look a bit low.
Trump is due to speak at 8pm GMT - think that this has helped strengthen the dollar today.
On balance you have to say - the Fed will hike in June
  • #108
  • Jun 14, 2017 11:37am Jun 14, 2017 11:37am
Hello Fader,
I just found your great thread. Will you keep posting? That would be great.
Thx
  • #109
  • Jun 14, 2017 7:26pm Jun 14, 2017 7:26pm
Hi zosoforever

Its just getting the time, I should have posted the EG trade on Monday and obviously the Loonie- Poloz was turning more hawkish in his most recent MP statement
I don't want to really put something down that I have not fully looked at
Should have some more time in July

Anyway here are my initial musings;

Kiwi
We have the RBNZ MP meeting next week. Currently coming off following miss on GDP figures, estimates seemed a bit high to me
Wheeler will not want to fan the flames of the recent rally against the dollar, next week, despite what some Kiwi economists want.
He hates a high Kiwi against the Buck
CPI currently at 2%, house price inflation has eased

Aussie
Presently oversold against the Kiwi
Also we have some employment Aussie figures due later -
And employment estimates do not look too high and job ads are on the rise
Estimating Aussie jobs is not really an exact science
And I am hoping that Wheeler will oblige next week
A couple of concerns I have is iron ore. This is a drag on the Aussie.
Plus Chinese factories have a a slow down recently
I know the banks think that buying the AN is a sound trade.
Have a small long position on this against the Kiwi

Dollar

Would like to be bullish on the dollar - but there are a couple of things that concern me
a) Poor data- inflation, revised downward employment figures - smacks of being fool hardy hiking rates at the moment. Lets see.
b) Trump

In a way Yellen has taken the wind out of the sails of traders. She has managed to hike rates whilst keeping the dollar low
  • #110
  • Jun 15, 2017 11:37am Jun 15, 2017 11:37am
Do you guys trade the rate hikes right away or do you wait a while for price action to calm down?
  • #111
  • Jun 15, 2017 1:03pm Jun 15, 2017 1:03pm
Quoting jchiogna1
Do you guys trade the rate hikes right away or do you wait a while for price action to calm down?
I read the policy statement first and wait for price action to confirm.

You have to know what has been priced in.
And how far away we are from what is expected
Just jumping in on a rate hike can cost you a lot of money
Yesterday, if the Fed had just hiked and then said future hikes are off the table- the dollar would have dumped
As it was - the market took a while to digest everything.
  • #112
  • Jun 15, 2017 1:19pm Jun 15, 2017 1:19pm
So, the Fed appeared more hawkish yesterday based on how it interpreted the condition of the economy. I'll have to pay more attention to Fed speak after the rate announcements.
  • #113
  • Jun 15, 2017 1:34pm Jun 15, 2017 1:34pm
Quoting jchiogna1
So, the Fed appeared more hawkish yesterday based on how it interpreted the condition of the economy. I'll have to pay more attention to Fed speak after the rate announcements.
That's the way mate. Its the change from what is expected- that is the critical part.
Everyone thought that the Fed would be dovish, and possibly not hike at all (after the poor CPI and adjusted labor figures).
  • #114
  • Jun 15, 2017 4:38pm Jun 15, 2017 4:38pm
Good Analysis and Critique of the Fed Rate Hike:

Inserted Video
  • #115
  • Edited 7:30pm Jun 15, 2017 7:17pm | Edited 7:30pm
Quoting jchiogna1
Good Analysis and Critique of the Fed Rate Hike: https://www.youtube.com/watch?v=lTzpb7vV4sc

Hi jchiogna1,
Many thanks for this.

Great to sees someone doing some research.. All of my best trades have come from research,(and waiting for the right moment)
Not many people do research.
Point in question;
In May the Fed said "the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data"
and " The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal".
https://www.federalreserve.gov/monet...20170503a1.pdf
This is a shift from lagging data, that is usually used. The market was looking at the wrong indicators.
Yellen seems to be basing her assumptions on the Phillips Curve in respect of the labor market
https://www.bloomberg.com/news/artic...toke-inflation

The main runner is what the banks think - and they are broadly positive at the moment
https://www.efxnews.com/news-archives

Although some feel that they have made a policy error
https://www.bloomberg.com/news/artic...-gauges-tumble
Also Trump has announced that GDP is meant to be great last month. Also eventually his tax reform will come through

Looking ahead the labour figures will be very closely monitored - and any rise in unemployment or drop in hourly earnings will have strong adverse consequences on the dollar. In respect of QE- that's another post
  • #116
  • Jun 15, 2017 7:57pm Jun 15, 2017 7:57pm
looking back at past BoJ decisions, it seems they different have an effect of JPY pairs. Maybe I should just go to sleep.
  • #117
  • Jun 15, 2017 11:21pm Jun 15, 2017 11:21pm
Holy Mackerel, excellent response. I'm going to sift through this for my research tonight. Thank you.
  • #118
  • Jun 16, 2017 5:26am Jun 16, 2017 5:26am
A couple of other things:

Check out some books by Steve Ward on the psychology of trading - well worth a read.
RBNZ next week- lets get fully prepared
  • #119
  • Jun 19, 2017 5:27pm Jun 19, 2017 5:27pm
No change expected. I don't know my antipodean pairs that well.
  • #120
  • Edited 6:32pm Jun 19, 2017 6:21pm | Edited 6:32pm
Iro the Kiwi here are my thoughts

GDP missed estimates (2nd month successive month)
Exports were down (due to the strong Kiwi). Wheeler won't be happy with this.
Employment is doing ok. Wage inflation is not great (if my memory serves me)
Dairy missed - although seems to be doing ok
The one thing that Wheeler hates is a high Kiwi against the dollar.
The Kiwi is also up against the Aussie (their main market)- although Lowe was doing he best to talk the Aussie up
McDermott (RBNZ) has said he was delighted that the Kiwi can off in February.
They have housing under control.
CPI is 2.2%.
But in his last speech -Wheeler said that this was basically transitory and Core inflation was low
He blamed petrol and food.
Well petrol has been low - but food was up 2.4%
So he could use that excuse again.
The target is between 1-3%

In February the picture was not as good as it is now- and the currency came off after he said that there will be no hikes for the foreceable future. (2+ years)

The one thing that will move this currency is any change against the current bias.
The current bias is neutral.

We will have to hear what he says - but Wheeler shoots from the hip- he says what he wants and won't hold back.
If he thinks that the Kiwi will fall due to the Fed hike - it will give him an excuse to hold fire.
On balance you would have to say that is the most likely scenario.

But I would be surprised if he does not mention his concerns about the high value of the Kiwi.
Will need to give this some more thought (research)
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