Sunday, August 03, 2008

FOMC week

We have the next FOMC meeting on Tuesday at 11:15am EST.
Most expect no change in interest rates.
I expect one swift move in the markets on Monday, which will be the setup day for Tuesday; which normally is a day filled with Chop and short bursts of volatility as the market reacts to the latest from the FOMC interest rate decision.

30yr bond and Euro

4 Central Banks Set to Announce This Week (from ForexFactory)
There are four central banks (AUD, USD, GBP & EUR) due to report this week on interest rate targets. Most analysts seem to be looking for no actual changes this time around but that does not mean that the market won't respond to the statements accompanying the releases. There is a great deal of sensitivity to these releases considering the recent surprise from the RBNZ and market volatility over the last week. Considering these reports, I see no reason why this volatility would decline this week.

Besides the releases from the central banks, the market is preparing for a continuation of last week's trend in favor of the USD. The affect here may be driven by a response to the J-curve. The J-curve describes the relationship a devalued currency has with its export growth. As the USD falls in value, cheaper exports from the US should rise in demand. This increase in export demand was somewhat in evidence with the preliminary GDP report from last week. Ultimately the curve predicts that demand for the exporting currency should eventually rise, which may be what is happening currently. This is an important week for the short term future of a stronger USD as it sits against resistance after failing to break highs from June and May on Friday. A break here could mean the longer term effects of the J-curve are starting to take effect and a strong USD trend is in play.


Anonymous said...

for the record, you got my respect back for posting on oscar. :) lol. not that you care, but you should know. try but don't pay for anything there either. He uses only MA's and pivots (sell under a 5 minute close of pivot, etc...) and the 1,2,3 buy/sell approach; however, he talks from the heart and I like to hear that. late.

HPT on 9:50 AM said...

I've always trade better alone. Each time I've used a chat room I've had bad performance. I tend to type too much and over analyze crap to stay active in the chat room and end up screwing up by not keeping it simple. I'll checkout his site tho, I'm always open to learning others techniques. Personally I think a volume based market profile strategy is best when used in conjunction with market internals and volume indicators.

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