Dec 13, 2016 - Story of the Week: Fed raising the rates by 50 bps tomorrow?

Hello mates,

So tomorrow is the big day, right? Well, still wondering what to really expect after few missteps from Yellen. Hike with dovish comments? No hike with hawkish comments? Or a surprise hike of 50 bps as the economy is growing and inflation pressures will kick in soon?

I believe we can all agree on a 25 bps hike that is already priced in by the market. The most important part will be the comments and guidance for 2017. Here, we are not likely to see dovish Yellen talking about 2-3 additional hikes next year even though Trump’s fiscal plans can support inflation expectations. We are also on the same page by saying Fed doesn’t have more or less any clear idea what to expect, what potential risks the economy might be coping with next year…etc.

What is a very strong signal proving that Fed is already behind the curve (we have expected Fed to raise rates in September) is the situation small and medium enterprises in US face. Actually, they already signal the shortage of qualified workers in some fields. As we move along, the economy is closing the output gap and the only question mark after OPEC/Non-OPEC countries agreed on crude oil production cuts is the level of capital investments. Still lacking a bit.

There is also another factor, apart from those we already discussed in The last big event in 2016 that we know about... and it is raising yields that may in turn support the banks, their profitability, improve risk models metrics and spur the lending activity to corporates as well as public.

Would you agree that it sounds like 50 bps hike tomorrow?

PS: Please keep in mind that the new US Government will likely look like a “US Inc.” sort of structure with all high profile and pro-business oriented people that will definitely push for more relaxed regulations and tax cuts.

Good luck Champs, let’s see tomorrow!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Dec 10, 2016 - FOMC - The last big event in 2016 that we know about…

The last big event in 2016 that we know about is coming. Can we expect any bad surprise from Yellen and her team? The probability of a 25 bps rate hike to 0.75% level is around 95%, in other words it is widely expected. Strong US data, the rise in bond yields and inflation expectations, and bullish stock markets seem to be supporting the case.

Facts

-          Probability of a 25 bps rate hike is priced at 95%

-          The hike is consistent with comments from Fed officials over the past few weeks as well as

-          US data coning in strong, the Trump presidential victory is pushing bond yields higher, reviving inflation expectations despite low crude oil prices and bullish stock markets towards the end of  year seem to be supporting the case

-          The pace of rate hikes in 2017 will depend on an increase in inflation, pace of labor market improvements and economic growth

-          Four members having the last meeting this week

Expectations

-          After last week’s ECB we expect volatility primarily in EURUSD, USDJPY and Gold but stocks as well as Emerging markets assets will not stay aside once the market will start to move

-          The hike may give additional support to USD towards the end of the year and in 2017

-          The Summary of Economic Predictions (SEP) should not deviate from the rhetoric and macro data we have seen in the past weeks

-          It is still very difficult to predict the tone of Yellen’s speech as she is clearly dovish but would need to acknowledge the good data and rate hike

-          Would be interesting to see whether they will mention the faster pace of rate hikes in 2017 on the back of bond yields jumping higher

-          Very likely after the FOMC meeting the markets will switch to Christmas holidays mode with nothing really going on but low liquidity and abrupt moves

By the way, I am sure you have already figured out that the stocks despite the expectations of rising rates are moving higher. Shouldn’t they be lower?

Well, the Trump’s expected corporate tax rate cuts and deregulation do the job.

Before we actually get to FOMC meeting let’s check what history can show us first.

Every significant Capacity utilization increase was followed by rise in interest rates:

To refresh the memory have a look at Historical rates (Source: Wikipedia):

Enjoy...

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

  

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Nov 28, 2016 - Weekly Tech Overview: Dollar Index (Updated)

Hi,
this is another weekly dollar update. It's even more interesting this time as bulls have to confirm breakout on weekly chart and that could be the challange taking intrtaday chart and upcoming GDP and NFP numbers into consideration.

We are still bullish medium and long term and if bulls confirm that breakout it could be just begining :)
Please check details on the charts below, enjoy:

Join Us FREE again next week - click here

US Dollar Weekly charts:

Previous updates:

DX – Weekly Update

The next two weeks is going to be very interesting from dolar traders perspective.

Our previous DX update is available here.

Free Live Trading Room - Join Us here

Risk Events:

Clinton / Trump rumors, speculations, comments

2nd November – FOMC

4th November – NFP

8th November – Election Day

Also we have to remember  we may see some profit taking / loss booking before end of the year when liquidity is still ok ( think mid/end of November ). So it’s clear that even the greatest Technical Analysis may not work because of the factors could play bigger role.

Anyway, as you can see on the chart below, we have a trading range after strong rally and we expect continuation to the upside ( yes, we are still USD bulls medium and long term as long as we are above 91/90,80 based on weekly close ).

Short term – failure around 100 level  could be good reason to Take some profits with first suport around  96 ( mid-range) and the bottom of that range as critical one.

Please check our latest recorded Live Trading Room’s where we discussed short term possibilities on USDJPY and EURUSD ( and the short term Outlook is still valid ): here and here

Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action


DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Oct 30, 2016 - Weekly Tech Overview Dollar Index (2nd Update to Week 27)

DX – Weekly Update

The next two weeks is going to be very interesting from dolar traders perspective.

Our previous DX update is available here.

Free Live Trading Room - Join Us here

Risk Events:

Clinton / Trump rumors, speculations, comments

2nd November – FOMC

4th November – NFP

8th November – Election Day

Also we have to remember  we may see some profit taking / loss booking before end of the year when liquidity is still ok ( think mid/end of November ). So it’s clear that even the greatest Technical Analysis may not work because of the factors could play bigger role.

Anyway, as you can see on the chart below, we have a trading range after strong rally and we expect continuation to the upside ( yes, we are still USD bulls medium and long term as long as we are above 91/90,80 based on weekly close ).

Short term – failure around 100 level  could be good reason to Take some profits with first suport around  96 ( mid-range) and the bottom of that range as critical one.

Please check our latest recorded Live Trading Room’s where we discussed short term possibilities on USDJPY and EURUSD ( and the short term Outlook is still valid ): here and here

Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action


DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Oct 15, 2016 - (Video) Weekly Tech Overview Dollar Index (Update to Week 27)

Good evening,
it's a video update to our original Weekly Tech Overview from Week 27 available here

FREE Live Trading Room / Live Market Coverage click here

We were and we are still within USD bull camp over the medium and long term ( as explained before ). The speed of USD rally will mostly depend on USDJPY ( in our opinion right now ), as EURUSD has a good chance to test at least bottom of the range on weekly. Please watch the video for more details:

Please also check our EURUSD analysis here and USDJPY analysis here

Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action


DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Sep 21, 2016 - EURUSD 1 hour pre-FOMC chart

Hello guys,

A quick look at EURUSD 1 hour FOMC chart:

We like this channel from intraday perspective:

Above 1.1330 possible 1.1450 then watch for weekly close

Below 1.1070/50 means Yellen did well, watch for weekly close.

All of these levels are intraday and close above/below extremes may push prices further and that could be something bigger but weekly close is important at this point.


Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading

Mr Price Action

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Sep 18, 2016 - FOMC meeting (Sep 20-21) – a discussion about exit strategy, really?

Now or in Dec? Data are ok, we are not all 100% sure yet but… should we wait until Dec? Hmm, Trump president, data might be worse, lots of international risks like Spanish elections, referendum in Italy or Brexit going wrong…our credibility…hmm…

Few words about current developments:

-          The market expectations for a rate hike in Sep are around 20% and 50% for Dec but we should more see it as either a dovish hike or hawkish no hike. Meaning Fed will either hike but will have dovish comments or will not hike and will refer to Dec with some wording about data dependency…etc.

-          Apart from present market risk related to uncertainty and very low predictability of Fed’s actions market is watching underlying data to get some hints about economic growth, inflation and employment. As the economy is getting closer to full employment, the GDP and CPI/PCE numbers are gaining importance.

-          Steepening of the yield curve at longer end – we may see it as market reshuffling over to shorter term maturities based on rate hike expectations

-          Division of the FOMC officials – of course as always is the case

Our expectations:

-          Our base view is one hike in Sep and eventually second one in Dec if data support. Please read more on:

Jackson Hole coming, but what about the rate hike…?  and  US job market - Full time vs. Part time employment

-          The GDP growth may not be at the level all Fed officials would like to see, eventually we may have a different picture after elections but the economy is overall growing and doing well

-          The question about full time employment is also off the table as almost all FOMC members share the same view that the economy is close to full employment with unemployment rate at 4.9% vs 4.8% (Fed’s full employment rate)

-          The only question is inflation - the headline PCE and core PCE. The Fed’s projections show expectations at 1.9% for 2017 and 2% for 2018. The last figures were at 0.8% and 1.6% y/y respectively.

-          As the inflation is lagging the economic growth and monetary actions, we see that the rise of prices is on the right track. Do not forget about still very low oil prices, that housing market is stabilizing and that the costs of medicare will not be a huge contributor to PCE due to administrative measures in place.

-          All in all – data is good enough to support the Sep hike, restore the credibility of the Fed, confirm its data dependency and independence ahead of US elections as well as avoid another round of confusion as we had witnessed last year

-          Fed officials will likely avoid facing the risks of no hike this year (as per risks described on top of the page) and vote for a 0.25% rate hike from almost a zero level what is from a historical perspective completely irrelevant level

-          By gradual hiking (starting in Sep) they will create a room for rate cuts if necessary, to face recession risks in the future. Doing that will also allow to push away discussion about negative rates in US. 

-         From a completely different perspective a rate hike would mean the beginning of the return to normal monetary policy, breaking the dependence on central bank funding, pushing for fiscal and structural reforms, and more innovation 

-         The reaction of the markets – let’s have a look at S&P 500. There is something strange going on as US stocks should be much lower to our taste before a rate hike. Is Fed cooking something for us?

-         The rate hike may be a confirmation for the markets that the US economy is doing well. Of course the initial reaction will be a small pullback that will be followed by a strong rally.

-        In case of no hike, we can see a stop hunting rally and a huge sell off after. Exactly the opposite to what markets are expecting at the moment.

Well, any questions just ask…

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Aug 22, 2016 - Jackson Hole coming, but what about the rate hike…?

Jackson Hole coming, but what about the rate hike…?

As the ongoing trust in Fed is close to zero, we may eventually see a bit of nervousness before Friday. We may spot some unwinding of the big position and abrupt moves, as the market clearly doesn’t know what to think or expect from Yellen. All of that despite pretty hawkish comments from Dudley and Williams last week, supported by Fisher over the weekend. This provides a short-term strength for USD at the moment.

So what’s the bet?

Looking at 4 rate hikes? This one is off…

Dec hike, looking like…

Oct hike, Fed hurry up before US elections…

Sep hike, well, the credibility of the Fed and its officials may increase by an inch from zero…

Questions

When we look at the history, Fed is cutting the rates when stock market is really going down. But where it is now? Printing new historical highs…, so it is the time to raise rates, right?

What about housing market? Peaking again…A time to raise rates, right?

What about USD? For some reason it is still not clearly moving higher…Why?

Economy and job market getting better, GDP growth is accelerating and with inflation getting close to Fed targets…Hiking?

Investments to recover after US elections, the effects of stronger USD to fade away…

Productivity slowdown? As Fisher said, we don’t know to measure it properly…

Slowdown in China, Brexit aftermath, debt issues in Europe, US elections risks? Worth to consider…

All of these are good questions but very likely, Yellen will not provide us with any clear signal. Has she ever?

Our take

We see two hikes this year and the first one will likely come already in Sep, so there will be some time for dust to settle before US elections. For those who see the same, the long USD, underweight or short US 10yr or 30yr Treasuries, and short silver and gold, may be the right trade. The question of regaining a bit of trust of market participants in predictability and communication ability of Fed officials will be tested again.

The second hike in Dec will be really data dependent in the light of results of US presidential elections of course.

Risks

Data, data and again data. Yellen at Jackson Hole will again point to data dependency (US NFPs are on Sep 2 while FOMC on Sep 21).

From political perspective the Brexit vote shock aftermath or US elections risks are also taken into account but at the moment, the risks related to US elections, seem to be bit ignored by bond markets. But what about the Fed?

All in all, the Jackson Hole speech may be again a non-event as it was 9 times out of last 10 speeches, apart from the one in 2010, when Bernanke announced the QE2 preparation.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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NFP: Upcoming Friday US job data preview

Friday’s NFPs have become a highly watched event, as after May +38k figure, Brexit referendum impact and uncertainty in global economy they will definitely provide some hints whether Fed is really off with rate hikes until late-2017. Overall, market is expecting the number between +175k and 183k while the 3 month average is at +116k. 

You should bear in mind that the release of strong number may not be enough for Fed to act, due to above mentioned risks and the fact that Fed is in a wait-and-see mode. Actually, even Minutes from last FOMC meeting confirmed that as Fed officials opted for prudent approach while stayed divided about the pace of rate hikes. Strong number supported by pretty good June ISM Non-manufacturing, better Final Service PMI, and eventually very solid Q2 GDP (to be out end of July) may form a good base for Fed thinking again about rate hike this year. 

The uncertainty and at certain moments risk off attitude are still present in the market what is well proved by very low yields in US Treasuries. They didn’t even recover during after-Brexit risk-on rally, in other words the low yields erased completely the effect of Dec 2015 Fed rate hike.

As Dudley (Fed) mentioned on Tuesday, we need to be patient on rates because of low inflation and uncertain global economic outlook. According to him US economy is doing well on average and US political process may represent certain risks. Overall, they need to see more data as they do not know more as all of us do.

To get ready for a strong number, check our DXY ( dollar index ) weekly technical overview at: 

http://landoftrading.blogspot.dk/2016/07/weekly-tech-overview-week-27.html.

Data will be released Firday at 12:30 GMT:
NFPs: +175k-183k exp, +38k previous
Unempl. rate: 4.8% exp, 4.7% previous
Hourly earnings: 0.2% exp, 0.2% previous M/M
Hourly earnings: 2.7% exp, 2.5% previous Y/Y

Participation rate: N.A. exp. 62.6% previous 


Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading teams view on past and current economic and capital market environment. It is not and shouldn´t been viewed as an investment advice and the creator of this material shouldn´t been hold liable for any loss resulting from action where despite this disclaimer someone would consider this  material  as an investment advice. 

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