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December 10, 2017

Busy Week Ahead For Major Central Banks. Fed Rate Hike Widely Expected

John M. Bland, MBA, co-founder, global-View.com


Fed Hike a Done Deal  The financial markets have already priced in a 25bp rate hike at the FOMC meeting next week (December 13) with the target range for Fed funds moving higher from 1.00-1.25% to 1.25 to 1.50%. Given that this move is widely discounted, it is difficult to guess how the markets will react to this decision. Markets are always forward looking, but we have to wonder if Fed Chair Yellen will want to hamstring Fed Chair designate Jerome Powell with a a forward rate hike signal in addition to a rates hike before he comes into office early next

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December 03, 2017

Global Economic Recovery Building Steam. New Fed Chief A Dove?

John M. Bland, MBA, co-founder, global-View.com


Economic Growth Accelerating Forex markets are in a state of flux as global economic activity appears to be gaining steam. This recovery has been uneven, and this lack of consistency has been reflected in a volatile lead EURUSD forex relationship. From early August until now, the EURUSD pair has traded a rough 1.1550 to 1.2100 range and it appears at the present time that the EURUSD is preparing for a run at the top of this range (1.2093). While financial officials generally keep mum about specific forex trading levels, we have been hearing pretty consistentl

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November 19, 2017

Market Seasonality And The British Pound Remains in the Spotlight

John M. Bland, MBA, co-founder, global-View.com


Seasonality In Forex Activity Forex trading has always been marked by strong seasonality. Following the arrival of the robots, some of the seasonality has been diminished. Nevertheless, end of month and end of quarter trading still have their special characteristics. The end of the calendar year, which is characterized by end of year for many financial statements and a number of global holidays tends to see institutions, such as central banks, trying to get decisions out of the way so that their profile is reduced in the final half of December and into th

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November 12, 2017

Continuity In New Fed Chair. The British Pound Bears Watching

John M. Bland, MBA, co-founder, global-View.com


Period Of Calm In Forex Trading? Markets have moved into a quiet period in the latest week as most of the current market uncertainties around the USD have lifted. Money markets are indicating now that a 25bp hike in the Fed Funds target range from 1.00-1.25% to 1.25-1.50% is a near certainty at the December 13 FOMC. Most money market economists are predicting a hike, and Fed Funds futures contracts are placing a near 90% probability on a rate hike at that conference.

Furthermore, the Trump Administration has made its selection for the next

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November 05, 2017

Fed Remains On Track For A December Rate Hike. Bank Of England “Dovish” Hike

John M. Bland, MBA


No Fed Policy Change; New Chair Named As widely expected, the U.S. Federal Reserve kept policy steady at its November 1 meeting. Since instituting quarterly press conferences mid-month in March, June, September and December, all but those special meetings have informally eliminated as dates for policy changes. It is now generally accepted that the central bank would prefer an opportunity to explain itself when major policy decisions have been made. Of course policy changes can be executed at non-press conference meetings, that has not happened yet. On the other hand, for several months no

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October 29, 2017

ECB Cuts Back On Quantitative Ease, As Expected. Markets React Strongly

John M. Bland, MBA


Buy The Rumor; Sell the Fact? There were no major surprises in the closely watched ECB policy decision on Thursday October 26. This was probably the most closely followed ECB decision ever because the ECB has been well behind the Fed and Bank of England in gradually pulling away from aggressive policy accommodation. ECB President Draghi has a market reputation for being a policy dove and forex markets took this ”policy tightening” as not as aggressive as they might have liked. The main focus of the markets was by how much the ECB would reduce its asset purchases (bonds) when t

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October 22, 2017

Catalonia Independence Heating Up; Fed Rate Hike Odds Rise

John M. Bland, MBA


Catalonia Stands Up To Madrid On Thursday, the Catalan President, Carles Puigdemont, stood up to Madrid by refusing to drop its independence claim for the region. Spanish PM Mariano Rajoy said his government (Spain) said it would move ahead with its threat to suspend the powers of the regional administration. Madrid said it would hold an emergency Cabinet meeting on Saturday, October 21st to begin process of suspending Catalan autonomy under Article 155. Rajoy plans to go ahead with Article 155 procedures to restore rule of law in Catalonia. Following Cabinet meeting, this declarat

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October 15, 2017

Fed Bias In Favor Of A December 13 Rate Hike

 

John M. Bland, MBA


”Unlawful” Catalonia Independence Vote Wins BigCentral banks continue to be the dominant influence in forex trading and in the financial markets generally. Most appear to be in the process trying to back away from supporting the markets and economies ever since the 2008 financial crisis. Different economies are at different points in their recovery process and those differences are reflected in the different policies of the respective central banks. Last Wednesday, traders focused intently on the Minutes of the FOMC meeting from September 20. The USD seems alway

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October 08, 2017

Catalonia Simmers While U.S. Economic Picture Improves

John M. Bland, MBA


”Unlawful “ Catalonia Independence Wins Big Last Sunday voters in the Catalonia region of Spain apparently overwhelmingly vote in favor of independence from Madrid. On Thursday, Spanish Economy Minister Luis de Guindos ruled out mediated talks with separatist leaders . He said independence is out of the question and that Spain has nothing to discuss with the secessionists until the rule of law is restored. Clearly, Madrid is taking a hard line on the vote by questioning its very legitimacy. There are press reports that Prime Minister Mariano Rajoy and his minority governme

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October 01, 2017

More Unexpected Policy Twists And Turns By The Fed

John M. Bland, MBA


Chair Yellen Does It Again! I was taken aback by the lengthy Yellen speech last Tuesday. It was an academic presentation laced with an update of current conditions. Most of us had felt Yellen could have nothing new to say after the recent Fed meeting, but included in her speech, she sent a hawkish signal to the markets about the December FOMC meeting. It took a while for the markets to figure out if she was sending a hawkish or a dovish message. The bottom line is that the Fed is having trouble with its economic models when it comes to inflation. She said the Fed has to pre-emptive when i

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September 24, 2017

Janet Yellen “the Hawk” And The Fed Deliver

John M. Bland, MBA


Janet Yellen, the unlikely hawk On Wednesday the Fed took a more hawkish policy stance than the markets were expecting. As expected, the Fed Funds target range was held steady at 1.00-1.25%. However, the central bank hinted at a tightening bias for the December 13 meeting. Also, as expected, the Fed announced that it would start to unwind its massive investment portfolio in October.

The vote was a unanimous 9-0 and the policy statement indicated that risks to the economy remain toughly balanced . The surprise was that a December interest

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September 17, 2017

Bank Of England Strikes A Blow Against Perpetual Quantitative Ease?

John M. Bland, MBA


Quantitative Ease (QE) Everywhere In this era of endless Quantitative Ease (QE), the focus always is on the major central banks. The hope for many investors is that this period of uncontrolled money printing of money will die a natural death, but it seems that something new is always standing in the way. Many yearn for a return to a “normalized” monetary policy and fully functioning money markets in the major economies, but it seems that something new is always standing in the way. The latest concern is that the Fed might feel the n

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September 10, 2017

Key European Central Bank Meeting Provides Some Clarity

John M. Bland, MBA


ECB: Growth, Inflation, Exchange Rate ECB President Draghi provided some interesting insights into its deliberations at the meeting which ended on Thursday September 7. After that meeting, as expected, no changes were announced in any of their key interest rates were announced. Draghi said that the meeting focused on growth, inflation and exchange rate.

GROWTH Draghi indicated that the growth in the Euro-Area economy has been “robust”. Apparently, the ECB feels the economy does not need additional stimul

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September 03, 2017

European Central Bank Meeting Major Focus. U.S. Jobs Data Disappoint

John M. Bland, MBA


Key ECB Meeting On Thursday There was chatter near the end of the week just ending that ECB officials feel the euro is too strong and that its strength is putting the Eurozone fragile economic recovery at risk. This week the EURUSD surged to a two-and-a-half year high and that has put pressure on Germany exports Furthermore, the stronger euro threatens to lower inflation, which is already well below target. On Thursday it was announced that flash Eurozone HICP had increased only 1.20% y/y vs. 1.20% for the same number in July. Core HICP gained 1.

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August 27, 2017

Central Bank Policies Inadequate. Time For New Methodologies

John M. Bland, MBA


Pushing On A String Traders spent the better part of last week waiting for the Kansas City Fed Central Banker Symposium in Jackson Hole Wyo. This has become a major event annually with key central bankers from all over the world in attendance. In past years, some figures have made news in their keynote addresses, but such was not to be the case this year. Both ECB President Draghi and Fed Chair Yellen were slated to make high profile speeches, but not much was expected in terms of news. Both (and many others) are having trouble combatting low le

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August 20, 2017

More Fed Twist And Turns. USD Helped By Risk-Off

John M. Bland, MBA


Following Fed Is Like Trying To Nail Jell-O To A Wall Trying to pin down the current policy of this Fed is muck like trying to nail Jell-O to a wall. First of all, their message is convoluted as they speak with way too many conflicting voices. The leadership (Chair Yellen, Vice Chair Fischer and N.Y. Fed President Dudley), keep signaling that the preference of the board is to “normalize” (= tighten) monetary policy, but they never seem to follow through. Policy seemingly is based on internal economic growth models and inflation foreca

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August 13, 2017

Can The Dollar Continue To Stabilize Against The Euro?

John M. Bland, MBA


EURUSD Shows Tentative Stability The latest week was slow on scheduled news releases but the geo-political threat posed by the potential North Korean nuclear threat began to impact the markets. Equity markets were already thought to be overbought by many stock analysts, and the North Korean threat became a pretext for reducing equity exposures. In general, this risk-off bias tended to be a pro-USD influence. Lower equity prices saw a run back into fixed income instruments and drove the yield on the 10-yr yield lower. The yield on the 10-yr

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August 06, 2017

Where Is The Dollar Headed Next? More Weakness In Store?

John M. Bland, MBA


USD Continues To Head South Vs. EUR The EURUSD has been trading gradually but relentlessly higher since mid-April from the 1.0550 level to a peak just shy of 1.1900. That amounts to a EURUSD gain of nearly 13%. This development will certainly be welcome in the White House as a falling currency improves the terms of trade for the weakening currency and thus is a stimulus for the economy.

A decade or so ago a weaker USD would have been seen as a problem because a falling currency increased the cos

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July 30, 2017

U.S. Monetary Policy Walking A Tightrope

John M. Bland, MBA


Fed Signals QE Taper and No Rate Hike What was expected to be an uneventful Fed meeting Wednesday had a serious impact on forex markets. Curiously, the policy announcement was about as expected with no changes in interest rates Fed Funds (1.00% to 1.25% range). As signaled at the prior Fed meeting in July, the central bank indicated that it would start to wind down its QE portfolio very soon. This wind-down could start as early as after the September 13 meeting. One mild surprise to the markets was another expression of concerns about the low levels of U.S. inflation. If this is born

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July 23, 2017

EURUSD Spikes Higher Despite A Dovish Draghi

John M. Bland, MBA


ECB Continues To Worry About Inflation The EURUSD was rising as the Draghi press conference following the ECB policy wore on. This left many casual observers of the forex market scratching their heads. As promised, the ECB policy decision turned out to be a major event for forex trading. The few traders who had been looking for a more hawkish Draghi were disappointed once again, while those expecting a dovish Draghi were correct in terms of his performance, but were squeezed out when markets did not react by selling the EURUSD afterwards.

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  • Busy Week Ahead For Major Central Banks. Fed Rate Hike Widely Expected More »
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  • Market Seasonality And The British Pound Remains in the Spotlight More »
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  • Fed Remains On Track For A December Rate Hike. Bank Of England “Dovish” Hike More »