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December 18, 2016

Fed Surprises The Markets

John M. Bland, MBA




 

Markets Unprepared For Fed The capacity for the financial markets to surprise me has no limits. I felt U.S. markets should have been set up for months for the Fed policy decision on Wednesday. but apparently they were not. The Fed had signaled a rate hike in December for months, and as universally expected, the FOMC raised the mid-point of its 0.25%-0.50% target range (0.375%) for Fed Funds by 25bps to 0.50% to 0.75% (0.625%). Curiously into the Fed decision the EURUSD h

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December 11, 2016

Draghi: When Is A Taper Not A Taper?

John M. Bland, MBA

ECB Announces A reduction In Asset Purchases

What might have been a conflicted European Central Bank surprised the Forex Markets Thursday by announcing a policy "tapering" which was NOT a "tapering". As widely anticipated, key interest rates were left unchanged, but the central bank announced that it would reduce its monthly asset purchases starting in April 2017 to EUR 60bn from the current EUR80bn level. Asset purchases will continue at the new monthly EUR60bn level until the end of 2017. ECB Pres

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December 04, 2016

Watch Out: Trump Is Now On The Scene

John M. Bland, MBA

Trump Arrival Boosts Confidence
The arrival of Donald Trump as President-Elect has not been a subdued event for the financial markets. Investors have been pricing in great things for the economy, perhaps some are unrealistic and it may be that they have gotten ahead of themselves. One of the first things a new President learns is how little power he has when it comes to pushing his legislation through the Congress. Fortunately for Trump, the U.S. economy was already starting to build forward momentum before

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November 27, 2016

U.S. In Transition

John M. Bland, MBA

Fed Chair Yellen Confirms Rate Hike
Markets are adjusting to the reality of a Trump Presidency, however a few of his second-tier opponents have started a campaign for a vote recount in a few of the key battleground states. These create a little uncertainty but are unlikely to change the overall results. At this juncture, Hillary Clinton is not behind the effort. Otherwise, President-elect Trump is working hard at hiring his new government. Under the U.S. system, most of the key jobs must be refilled when a

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November 20, 2016

Double-Edged Sword: Yellen And Trump Drive Dollar And Bond Yields Higher

John M. Bland, MBA

Fed Chair Yellen Confirms Rate Hike
In testimony to a joint committee of the House and Senate, Fed Chair Yellen signaled that the central bank will likely be hiking its Fed Funds target by 25bps to a range of 0.50% to 0.75% on December 14. Although she was not explicit, in the context of her testimony the markets interpreted her comments as a clear rate hike signal. A rate hike had not been in doubt even before Donald Trump had beaten Hillary Clinton for President. However the view at that time was that it

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November 13, 2016

Trump Turns Conventional Wisdom On Its Head

John M. Bland, MBA

Trump Presidency
When markets closed Tuesday in North America traders were expecting an early evening with Hillary Clinton expected to be well on her way to the Presidency after polls closed in the Eastern time zone. Most of the states that were in play are in the East and Middle-West. Fairly early on it soon became evident that the vote was not coming in the way political pollsters had predicted. In the end, this was a historic Brexit-like event for the U.S., where populist sentime

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November 06, 2016

Three Ring Circus: Election, Fed and Brexit

John M. Bland, MBA

Election, Jobs And Fed
Obviously the major event of the week ahead will be the outcome of the U.S. Presidential election. At this juncture, it appears that Hillary Clinton is in the lead, but the vote is still shrouded in uncertainty. The market reaction to the outcome should be driven by the amount of uncertainty it generates.

The October U.S. employment beat expectations when revisions to prior data were taken into account. Also the key Average Hourly Ea

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October 30, 2016

Sterling Back To Center-Stage

John M. Bland, MBA

U.K. Developments
Developments in the U.K. have continued to dominate trade in the latest week. A major event was House of Lords Economic Committee testimony Tuesday by Bank of England Governor Carney, who did not send the signal for a rate cut that many in the markets had been hoping for. His comments implied that an early rate cut is improbable in light of the GBP slide after the Brexit vote. He said there were limits to the central bank's ability to overlook the effect of the steep slide, about 18% since

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October 23, 2016

U.K. Brexit Nears Another Decision Point

PM May Confronts Brexit

John M. Bland, MBA

While the U.K. Brexit vote seemingly was settled back in June, there remains a lot of interest in the topic because we all knew the "devil was going to be in the details". New U.K. PM May was quietly against Brexit before the referendum, but has been forced to embrace if due to political realities. The issue now is how she will navigate the U.K. exit from the EU with her party each day taking a harder stance on exit and therefore keeping her feet to the fire. The chatter has been that May would have preferred to pursue a "soft" Brexit, but

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October 16, 2016

Fed Policy Back In Play Once Again

John M. Bland, MBA

Fed Policy Resolve Softening?
The latest week saw the release of Meeting Minutes for the September 14 FOMC Conference. From my perspective, policy Minutes were a jumble. I had been expecting a clear tightening bias and the central bank seemed to be backing away modestly from its previous aggressive hawkish posture vis-a-vis a December rate hike. One thing that markets do not focus on much these days is that the U.S. central bank has a unique twin policy mandate. It is charged with maintaining full-emp

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October 09, 2016

September U.S. Jobs Data Disappoint

John M. Bland, MBA

Lacklustre U.S. Jobs Data
The September U.S. Jobs data missed street expectations. The data were softer, but they were not a disaster. Non Farm payrolls increased by +156K in the month but fell short of expectations for a gain of 175K. Those citing the upward revision to the August data could be losing sight of the fact that August was also a miss. the rebound in Average Hourly Earnings got it back to where it has been for a couple of years. The unemployment rate at 5.00% is well above where it was in June (

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October 02, 2016

Don't Mess With Financial Market Confidence

John M. Bland, MBA

Justice Department Fine
What appears to have been a retaliatory political decision by the U.S. Justice Department when it proposed a USD14 bn fine against German Banking giant Deutsche Bank  (DB) for activities in the mortgage-backed markets almost ten years ago has run the risk of triggering a global financial crisis. The fine would require the bank to raise additional capital, when it already is in a weakened state. Part of the problem is recent regulations which stand in the way of the German gove

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September 25, 2016

Game Changer Central Bank Decisions

John M. Bland, MBA

Momentous Central Bank Developments
Few market participants were expecting the FOMC to raise on Wednesday. Sentiment was correct as the Federal Reserve kept its key Fed Funds target range steady at 0.25-0.50%. The markets had been running very low odds on a rate hike. What did surprise traders was that FOMC members significantly marked lower their interest rate forecasts for 2017. So even though Chair Yellen specifically mentioned the possibility of a rate hike this year, presumably at the December 13-14 me

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September 18, 2016

Why Did the GBPUSD Plunge on Friday?

The dollar ended the week sharply higher in a forex market that remains highly sensitive to news headlines. As is generally the case, it is the reaction to news that is more important than the news itself. This was the case again on Friday when the dollar firmed following an above consensus US August CPI report and never looked back. A big loser on the day was sterling and its weak showing, as I will explain below, may have to do with more than just the news.

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September 18, 2016

Fed Rate Hike: Mission Abort!

John M. Bland, MBA

FOMC Wednesday
So here we go again. The next Fed policy decision is scheduled for Wednesday, September 21 at 18:00 GMT. Fed Chair Yellen had put this meeting into play for a possible 25bp rate hike recently at the Jackson Hole Symposium, but economic data between then and now have been disappointing and called the outcome of the meeting into question. Then a week ago, Boston Fed President Rosengren, a former dove, seemingly sent a message that this meeting is still in play. Subsequently on Monday, Fed Governo

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September 11, 2016

The Forex Market is Not Your Enemy

Have you ever had one of those trading days? Have you ever lost money trading and gotten mad at the market? Have you ever taken it personally, lost discipline and tried to convince yourself the market is wrong? Did this make you feel like the forex market was your enemy?  Did this have you fight the trend in order to beat the market only to see your efforts repeatedly stopped out? This has probably happened to most traders at one time or another but it is not something you want to repeat.

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September 11, 2016

Fed and ECB Policies Intertwined

John M. Bland, MBA

ECB Disappoints
It is not often that the policy decision of the ECB every six weeks or so impacts global financial markets, but such was the case on Thursday September 8. With the Eurozone economy growing slowly, many were expecting the central bank to do more to stimulate growth. Since it is increasingly being accepted that negative interest rates do not provide the stimulus that in theory economists felt they would, no reduction (more negative) cut in interest rates was expected. Many had been hoping that

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September 06, 2016

Diary of My Forex Day

I am often asked what a typical trading day looks like for me, so I thought I would briefly sketch this out for you.

At the start of each new trading day, I will have already analysed the monthly and weekly charts (in the context of both Elliott Wave & classical charting) so my attention focuses upon analysis of the Daily, Hourly & 5 minute charts.  

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September 04, 2016

Slowing Economy Could Put Fed On Ice

John M. Bland, MBA

Disappointing U.S. Jobs
Once again the markets have been sent mixed signals by economic data. The August increase in jobs was a disappointing +151K following an average gain after revisions of 273K in the previous two months. Furthermore, Average Hourly Earnings gained by a scant 0.12% in the month vs. expectations for 0.20%. So the data missed on several counts. These data were not supportive of speculation about a September 21 increase in the Fed Funds rate. Something else the Fed has to consider is whether

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August 28, 2016

Fed Sends Confused Policy Tightening Signals

John M. Bland, MBA

Fed to Raise Interest Rates
The focus for the last several weeks has been on the speech Friday by Fed Chair Yellen at the Kansas City Fed Symposium at Jackson Hole, Wyo. Over the years, this has become a major event for global central bankers. It was especially significant this year with many feeling the Fed has been falling behind the curve on policy, and that the time has long past for what is in essence an emergency stimulus program at the central bank. Chair Yellen did not disappoint. Yellen said th

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