Stocks Slide On Potential Fed Rate Hike June 25, 2015
Markets Taking A Fed Hike Seriously?
I do have my doubts just like everyone else that the Fed is actually going to raise rates this year. I am sticking with my assessment that they should and almost have to but considering the history of late, if we go back and look at the threats over the last couple decades, the Fed has roughly a 50/50 track record of doing what they imply. Its no wonder no body believes them. Having said that there was a development in the last Fed member Powell speech along with others.
Reports from MNI that the FOMC majority is not prepared to wait indefinitely for market participants to be fully on board, appear to have taken the shine off the exuberance. It seems yesterday’s warning from Jerome Powell that there will be 2 rate hikes this year did not stall the stock bubble enough and so more “officials” leaked more information today.
As MarketNews reports, Fed officials have let it be known they realize they can’t avoid all volatility and are prepared to move when they believe they have met two main conditions for “liftoff.”
The Deutsche Boerse publication notes that the Fed has done everything it can to facilitate communication with markets, “including FOMC statements, press conferences, quarterly economic forecasts, Congressional testimony and speeches by key policymakers” to convey how the Fed perceives progress toward fulfilling the two conditions.
We can only hope that this hits a nerve in the markets and when time comes to prick the bubble in equities, its just a little pop rather than the explosion some are expecting. If the Fed is serious (questionable at best) then they will wait for something significant before acting to save the markets yet again. However we can just about guarantee they will if history over the last 30 years tells us anything.
EUR/USD Holds Of On Third Push
The potential for the EUR/USD making the third push today is still there but weaker than yesterday. I will have a bias for the push down while open for a long with the right set up at 1.1153. Having said that it will take a Greek deal all of a sudden coming in to get any Euro strength moving. The best shorting level is at 1.1224 but if the rumors fly on a deal we may see a push to 1.1256 before it gets crushed by Germany and the IMF. From what I saw this morning the IMF will not change any of its red line stance so it will take full capitulation from the Greeks which I dont see happening either.
GBP/USD Runs Third Push Into Daily Breakout
Today I will have a small bias for the reversal on the GBP/USD but if they really were going to make the full reversal I expect to see more of a bottoming formation and a pullback up into Tuesdays price action. If this daily low holds and they widen the Asian range I will be open for a short at 1.5708 or just above with a clear set up but I do prefer to see them run to test the lows and take the long at 1.5675 since a reversal is slightly more probable.
EUR/JPY Holding With EU
The move on the EUR/JPY is still tighter with the EU so I will still have a small bias for the short but I am a bit concerned about the potential bottoming yesterday so I will be more open for the long if the EUR/USD is pushing upward. The best level to short is up at 139.08. Otherwise I will consider a long at 138.51.
Forex News Today
The calendar is slow today so they will likely be pushing on price action baring a tape bomb from the Euro Group meetings on Greece. There is the German GFK Consumer Climate early but I doubt they will be pushing on it even if it misses big.
The US has Thursday Unemployment claims but with the end of the meeting coming around the same time, it will most likely be trumped by any press releases unless by some chance it disappoints big causing some rethinking of potential rate hikes from the Fed.
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