The FOMC Meeting Minutes may not shock. The cat is out of the bag already. Apparently, the vote to hike was a "close call" - according to Vice Chair Stanley Fisher.
Looking at the November Fed Fund Futures chart, it's still a "no". The December chart reflects a confident maybe.
By the way, it's great to be back in your email inbox today. Between Hurricane Mathew and some work travel it was difficult to get my own GPS going. It's a wise decision to know when to tap the breaks on trading, let some winners ride, and wait for the set ups come to me.
For those of you who may have missed my election trading discussion, the replay is here. https://www.simplertrading.com/webinar/trade-the-election/replay
Outside of the FOMC Meeting Minutes...gold, crude, which central bank is most dovish, and can Prime Minister May alone really set a date for trigger Article 50 (aka beginning the the Brexit process) are all on my radar.
Looking at the timing of the move lower though 1300, the ECB's decision to not move to even lower negative interest rates was all gold sellers needed. Consider that gold has benefited from negative interest rates around the globe. The precious metal is one-part currency and one-part saving account replacement. If more NIRP is not a reality, neither are 1300 buyers in gold.
Perhaps you already know I am a huge TradeStation fan. For those of you wanting to try my 34EMA Wave and GRaB Candles (free) you can do so on Trading View as well.
I'm watching the 200 period Simple Moving Average. The timing of this support is closing in on a major catalyst in the FOMC Meeting Minutes release.
Whether this is a giant bamboozle (probably) and whether crude continues to rally through 50/barrell will have a lot to do with whether OPEC and Russia can agree to a cut/freeze/something.
This Russia story has been pulling from opposite directions. There's the narrative that the Russian Energy Minister is not optimistic about an OPEC deal at the World Energy Conference in Istanbul this week.
There's another narrative that Putin says that Russia is ready to join OPEC.
“Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same...In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.” - Vladamir Putin
There's still plenty of time for minds to change...and change again before the next OPEC meeting on November 30. By the way, Russia is selling more crude than ever to China and their output just reached record highs last month.
Oh and did I mention that most of them were pro-EU? Look for GBP/USD volatility on the hearing dates of the 13th and 17th.
Great to be back and sharing my analysis with you! Thanks for reading.
The G20 has kicked off and that can only mean random, self-serving sound bites coming from key central bank figures...be ready for volatility.
This week the People's Bank of China (PBOC) has twice strengthened the daily fix after the yuan/dollar rate hit 6.7 which is the lowest it's been in four years. It's the kind of thing the PBOC has to react to 1) In front of G20 and 2) In order to reel in their outflow problems.
The UK got a post-referendum look at PMI numbers which were mixed as the Services PMI crossed the 50 line in the sand and printed below the previous (52.3) and lower than forecast (48.9). On the other side of the coin, the Manufacturing PMI printed at 49.1 beating the forecast but still below the 50 level and the previous print of 52.8. I wouldn't call it bad but the real test is how did the market react. Here's my "vertical line indicator"...
Very sophisticated I know. It's still the best way to make sure I don't fall in love with my own narrative and confirm data with price action to the reaction of the market. If you had any doubt about whether the decent Manufacturing number or Services number was going to have more effect, there's your answer. The GBP/USD and PMI numbers move pretty tightly with one another.
It's widely expected that the IMF will cut UK growth forecasts and I still see the GBP as a good short especially against the USD.
However the part of the conversation that's not being discussed enough is that post-Brexit the magnifying glass is being held over Europe as well and I do not see either Germany or France outpacing UK growth. That's a EUR short in my book and I'll look for opportunities to sell the DAX too.
We're going to get the Bank of Japan's two-day meeting and finally see what Abenomics 2.0 will look like: I think it will look like (possibly) upwards of 10 trillion yen flooding the market and U.S. equities are going to be the beneficiaries of that. Look for a 20bp cut as well in addition to the stimulus.
I will discuss the relationship between the USD/JPY in the next update.
Sound bite of the day (so far): Minneapolis Fed Kocherlakota: "Yellen needs to make more speeches." We've been talking about that all year. And he's 100% right. Her current FOMC Chair "mime act" only turns up the volume of the other Fed officials. And only the FOMC Chair has the ability to speak on behalf of the FOMC. That means everyone else is just running their mouths...
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