FOREX - Trends, Forecasts and Implications (Episode 19: September 2012) - page 152
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IT-Invest - Prospect
Thursday afternoon trading will be inactive and haphazard
The key event of the day, the week, and probably the whole of September will be today's meeting of the US Federal Open Market Committee (FOMC). More than half of market participants expect the Fed to announce on Thursday the launch of a new round of quantitative easing (QE-3).
Yes, the US economy does not look bright and the current unemployment situation remains far from normal. However, if the previous two programs of quantitative easing have failed to radically improve this segment it is probably not worth launching a new one. Especially since the "Twist" program is still in force until the end of this year. Therefore launching the printing press, given that the current USA unemployment rate (8.1%) is already at its lowest level since spring 2009 and stock indices are at yearly highs, would not be logical. Better to leave the monetary <bazooka> for when markets and investors are laying down expectations from the problems of the <fiscal cliff> in early 2013. To please the markets, we can launch QE-3 right now, but in that case we will see the dollar exchange rate near 1.40 to the euro and the price of WTI oil at $115/bbl. Does America need $4/gallon gasoline on the eve of a presidential election? The answer is obvious.
In our view, the Fed will leave rates unchanged tonight, with the nature of the accompanying FOMC statement being rather mild. This scenario presupposes a reduction of speculative short positions in the dollar (EUR/USD is coming back to 1.28), a correction in commodity prices and a 1.2-1.7% decline in stock indices. In other words, we could see a local dump of speculative longs opened on these expectations once the players' expectations of a further widening of the FedReserve balance are lifted. Nevertheless, we do not exclude the option of a short-term upward movement in EUR/USD to the region of 1.30. A breakdown of the upward trend in stock and currency markets will only be possible in case of another problem in the Eurozone debt market or new weak statistics from the USA or China.
Coming back to our market, yesterday the MICEX index chose not to react to oil price growth (Brent $116.2/barrel) and positive news from Europe. After a good upward move at the end of the previous week, we have been trading in a consolidation zone for 3 days now, with the boundaries at 1465 - 1485 p. for the MICEX index. Accordingly the RTS Future is also locked in a 146-150k channel for now. As the main market events are set to unfold in the evening, trading during the day will be patchy and sluggish.
The Fed's two-day meeting will result in an interest rate decision and accompanying statement at 2030. At 22-00 the Fed's new economic forecasts will be released, including for the first time the outlook for 2015. At 22-15 there will be a press conference by Fed Chairman Ben Bernanke. Additionally, today at 16-30 we are waiting for weekly jobless claims report as well as US PPI data for August.
Potavin Alexander
Chief Analyst of the Brokerage Group.
"I.T. Invest-Prospect.
(495) 789-46-69 ext. 2951
potavin@iqi.ru
Since 10 September people have had a mental breakdown, they have started to believe that the eu will continue to rise, it looks like it won't be long before we see a reversal
Since 10 September people have had a mental breakdown, they have started to believe that the eu will continue to rise, it looks like it won't be long before we see a reversal
Thanks, I've noticed that too!
I'm not ready to cover the bai, but I don't know where to put the takeprofit? 1,3050?
Moreover, I'm thinking to increase the position further. Of course, the trailing stop is 25 pips. If it works, it will work.
All according to plan ............... )
Guys, does anyone have any targets on AUD/CHF?
I've already posted my vision, but I have to wait for confirmation.
I have already posted my vision, but we have to wait for confirmation.