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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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July 15, 2017

Commitment Of Traders Report for 11 July 2017 Data

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Forex trading is all about stops. The Commitment of Traders Report (COT) is an imperfect, but useful, "sampling" of market positioning. I would prefer more frequent and precise readings, but we have to live with what we get. The data work for the purpose of getting an idea if traders are positioned long or short and if they in big or small.

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July 16, 2017

Fed Chair Yellen Softens Her Policy Stance

John M. Bland, MBA


Fed Changes Its Policy Signals Once Again

Trying to nail down current Fed policy is like shooting at a moving target. The week just past saw what might have been Chair Yellen’s final Congressional appearance as head of the central bank, as it currently seems as though she will not be reappointed early in 2018. The items the market zeroed in on were in her prepared text. Keep in mind that her prepared text was written to convey precisely whatever message the central wanted to

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July 09, 2017

Credit Markets Starting To Discount Transition From Quantitative Ease

John M. Bland, MBA

Fed Minutes Do Not Disappoint FOMC policy meeting minutes following each meeting have become an important part of the central Bank's communication process. They are also roughly three weeks ahead of the following meeting. They are not just a recap of the meeting, but they have been evolving into a policy update mechanism. What is released seems now to be aimed at explaining the most current thinking on policy. The latest Minutes released focused on the concerns of some at the Fed who now might be having second

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July 02, 2017

Unexpected Sea Change In Policies At Top Tier Central Banks

John M. Bland, MBA


ECB President Draghi Roils the Markets

Over the past several months I have kept returning to the theme that the major central banks have been playing a key role in the tone of the markets. Once again they are back in the limelight. This time it was ECB President Draghi who set the stage for major moves in the global financial markets. In a closely-followed speech at an ECB Conference in Portugal, Draghi surprised markets. While he stuck to his usual cautious posture on policy, traders reacted to h

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June 25, 2017

Central Banks (Bank of England and Fed) Continue To have Profound Impact On Forex Trade

John M. Bland, MBA


Bank Of England Sends Confused Policy Message The Bank of England took a page out of the Fed’s playbook this week after it sent mixed messages on policy. It’s difficult to understand the rationale for a central bank sending a confused message to the markets. Early on the week just past, Bank of England Governor Carney dampened expectations of a near-term rate increase. Then towards the end of the week Chief Economist Haldane indicated that he favors withdrawing some stimulus later this year, p

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June 18, 2017

Surprisingly Hawkish Signals From Fed Chair Yellen

John M. Bland, MBA


Fed Hikes Funds Rate By 25bp As Expected, But Surprises On Taper Announcement The Fed announced a 25bp hike in its Fed Funds target range of 0.75%-1.00% to 1.00%-1.25%. This was the third interest rate increase the past three months. A 25bp rate hike had been widely expected at this meeting. There is no doubt that the pace of rate hikes has accelerated recently. Markets feel the Fed would like to hike rates three times this year and three times in 2018. Their ultimate goal is to raise rates to what it

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June 11, 2017

British Election Stunner, Mixed Messages From Draghi, Fed Decision Awaited

John M. Bland, MBA


U.K. Votes Remain A Predictable Source Of Uncertainty In yet another important election, voters have come out again against the political establishment. While PM May ran a poor campaign, the underlying message of the electorate once again was one of dissatisfaction with the status quo. Politicians who do not recognize this reality are likely to have a difficult time at the polls. Once again, political pollsters were given another taste of humility. For now PM May is destined to rule from a weak minority gov

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June 04, 2017

British Election, ECB Decision And U.S. Jobs Surprise

John M. Bland, MBA


U.K. Vote Has Become A Horse Race When PM Theresa May called for a “Snap Election ” several weeks ago, the Conservatives initially were 20 percentage points ahead of Labour and seen easily picking up a number of extra seats in the election slated for Thursday June 8. Somehow the Conservatives lead in one poll has dwindled to as low as 3 percentage points late in the week just ending. The talk is that many are unhappy with the Conservative Party, but prefer current PM May over Labour Party Leader

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May 28, 2017

Somehow Fed Policy Is Back In Play Again

John M. Bland, MBA


Fed Resolve Waning? Wednesday May 24 saw the release of the Fed Minutes from the FOMC meeting which concluded on May 3. Minutes for FOMC conferences are released three weeks following each Fed meeting. A key point about the Minutes and why the markets react to them is that while they are based on the meeting, the Fed can choose to emphasize whatever it feels are the relevant comments in the light of subsequent developments nearer to the release date. It turns out that the Fed Minutes have become an "update" t

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May 21, 2017

Special Counsel To Investigate Trump Election Committee Calms Markets

John M. Bland, MBA


Special Counsel Named To Investigate Any Coordination Between Trump Campaign and Russia The New York close has become the time for bombshell political announcements affecting the Trump Administration. Late Wednesday of this week saw the Justice Department appoint a special counsel to investigate possible coordination between the Trump Presidential campaign and Russian officials. Deputy Attorney General Rosenstein announced that Robert S. Mueller III, former FBI director (2001-2013), had agreed to take over

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May 14, 2017

French Election Settled, But New Trump Controversy Blooms

John M. Bland, MBA


Macron Victory In France Greeted With Relief By Markets Pro-EU adherents in Europe greeted the overwhelming victory of center-left and pro-EU candidate Emmanuel Macron over Far-right candidate Marine Le Pen in Round Two (Final Round) of the Presidential selection process with relief at the start of the week. The result puts to bed any medium-term worries about a French exit from the EU. The fear has been that the U.K. "Brexit" decision could spread to the Continent, but so far this has not been the case. The

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May 07, 2017

French Presidential Election Looms Over Another Sunday

John M. Bland, MBA


Markets Price In Macron Victory For Sunday Presidential Vote Far-right candidate Marine Le Pen and center-left candidate Emmanuel Macron were the top two finalists from Round 1 of the French presidential elections two weeks ago. This Sunday, May 7 sees Round Two (Final Round) of the Presidential selection process. Macron has consistently been polling at a prohibitive 20% advantage over LePen. A final Presidential debate took place on Wednesday. According to post-debate polls, viewers felt that Macron had outperformed LePen.  

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April 30, 2017

ECB Disappoints The Markets As Yields In Fixed Income Markets Fall

 

John M. Bland, MBA


No Change In ECB Policy Bias Disappoints Markets


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April 21, 2017

Sunday French Vote Could Be Pivotal For Euro

 

John M. Bland, MBA



French Presidential Election In Spotlight Sunday April 23 will see the first round of the French Presidential Elections. There is a long list of contenders running, but the main focus is on the top four candidates. To win, one candidate must garner 50% of the vote. If no one wins 50% of votes cast, there will be a second round contest between the two top vote getters on May 2 to determine the next President. There virtually is no chance that any candidate will garner the required 50% wit

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April 14, 2017

Key Surprises For Traders By President Trump

John M. Bland, MBA



Dollar Comments A Surprise President Trump surprised forex markets late on Wednesday when an interview with the Wall Street Journal was released. The President indicated that the USD was becoming too strong. We assume he was talking about the EURUSD pair because the dollar has been rising against the JPY ever since he became President. Furthermore, the dollar has been slipping against the Chinese Yuan due to heavy sales of U.S. securities by the Chinese Central Bank (PBOC) to support their currency. He

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The Latest Articles
  • More Fed Twist And Turns. USD Helped By Risk-Off More »
  • Can The Dollar Continue To Stabilize Against The Euro? More »
  • Where Is The Dollar Headed Next? More Weakness In Store? More »
  • U.S. Monetary Policy Walking A Tightrope More »
  • EURUSD Spikes Higher Despite A Dovish Draghi More »