USD Gains On Philly Fed, Unemployment Claims June 19, 2015
USD Gets Boost On Better Data
The USD did get a small boost on better than expected data from the Philly Fed and Unemployment claims yesterday but I have to admit if there was any real conviction in that raising the potential of a rate hike from the Fed then we should have seen them push above yesterdays open and have a positive daily close on the USDX. The daily rejection does look promising and we are likely to get a plethora of tape bombs regarding the Greek debacle so it does have potential to continue however it wont be due to thoughts of a Fed rate hike. To quote one of my favorite gloom and doomers.
There is only one REAL reason why rates remain so low. Actually it’s a $555 trillion reason: and they are derivatives based on interest rates. That is not a typo. $555 trillion… as in an amount greater than 700% of global GDP.
This is the REAL issue with interest rates, NOT the economy. The Fed cannot and will not raise rates any significant amount without risking a Crisis that would make 2008 look like a picnic (the CDO market which caused 2008 was a mere $50-60 trillion in size by comparison).
This is why Ben Bernanke told a group of hedge fund managers behind closed doors “rates will not normalize in my lifetime.” Rates CANNOT normalize because this would instantly implode the financial system.
Now that doesnt mean that they wont raise rates at all because in reality I think they have to soon or they wont have any wiggle room to lower them if the US economy weakens. Of which is why I mentioned previous commentaries, I think they will raise a token hike this year or it may be too late next year. Having said that, I am not holding my breath either.
EUR/USD Shows Topping On Sloppy Pushes
I would be happier seeing a better three push move before seeing the nice topping formation we have on the EUR/USD but all things added up and the potential for a reckoning with Greece happening today this pair could go either direction so I will be looking to trade the highs at 1.1417 short or 1.1346 or just below at yesterdays lows for a long today. There is a chance that the current Asian highs hold it for a short as well but the risk is much higher and the potential of them running stops on a Greek rumor is high.
GBP/USD Extends Push Shows Topping
The GBP/USD has a better chance of turning today since we do have a topping formation. However that is not enough to give me a clear bias even though I will be more open for the short. The best level to short is 1.5917 but I will still be open for a long from 1.5847 or just below at yesterdays lows.
EUR/JPY Shows False Conviction, Topping
The false conviction and topping formation does increase the probability of a push down today but the safer entries will be at the extremes. As long as we dont get something big from the BOJ this morning I will be open for a short from the current Asian highs but if it does shoot up on the BOJ Press Conference then waiting for 140.39 is a better choice. Otherwise I will be open for a long at 139.62.
Forex News Today
Other than the BOJ this morning the calendar is rather bare. There is some Canadian CPI and Retail Sales for Loonie traders to watch but other than that there is only a couple of Fed member speeches later in the day.
Beware of any Greek tape bombs
Have a great weekend
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