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Another Take On A Fed Rate Hike April 21, 2015

April 21
04:38 2015

Just When Will The Fed Hike Rates?

Although most all of readers know that I dont think the Fed will ever raise rates there are plenty out there that do. Some are even crazy enough to think they will do it in June while most think they will wait till September and others on my side say “not in Bernankes lifetime”. In light of this I thought it would be important to throw out there an opinion and reasoning that does make sense if that is the way the Fed is thinking. Steen Jacobson believes the hike will be in September, possibly June. Whats interesting is his reasoning why. See below

That’s where I differ from most Fed watchers. Everyone else is looking at employment, inflation targeting. I don’t think Fed is at all looking at those. They are saying “Listen, the 0% interest rate is getting us absolutely nowhere, we think it’s very, very important for us to move to a more neutral place”. At the same time we will communicate that we are open-minded to additional programs or whatever needs to be done to secure the long term growth of the economy. But that will be on the down side, not on the up side. And as year has progressed, and I’ve said this publicly, I think 2015 is already lost in terms of recovery here.And that will take the market by surprise.

 The market will ask in September when the Fed hikes: “Why are you hiking interest rate when growth is below target, inflation below target”? Well, the Fed’s response will be “Because this is the biggest asset inflation we’ve seen in human history and we need to address it”.

I have to admit that if the Fed has the nerve to admit it has created the biggest asset bubble in history then Steen may just be right. However if they do manage to suck it up and take their lumps (of which I highly doubt) then why not do it in June? Why not admit it well before when they created the housing bubble that burst in 2007-08? And the answer is.

Fed Stupidity

Check out the full interview with Chris Martenson below

EUR/USD Makes Reversal

The EUR/USD has made the reversal for a first push yesterday so I will have a bias for the short today. I will say that the push is a little shy of what I would like but there was some conviction below the Friday lows so thats the direction I will be leaning today. The best level I see for the short is up at 1.0792 but the 1.0765 is valid and I would prefer a test to the lower level during Asia before they run stops, adding probability . Otherwise the 1.0722 is valid for a long but I will need to see enough to change my bias.

EURUSD Runs Reversal 4-21-2015

GBP/USD Makes Short Push

I have to admit I never like the short pushes but the GBP/USD has shown the conviction below Fridays lows as well so I will have a small bias for the short here today. The best level is at the 4hr 200 at 1.4920 but if they push it down far enough during Asia I will be open for the backside entry at 1.4889. Otherwise I will wait for the test of the Asian highs or just above at the EMA. There is a small chance they will push it back into the range but again I will need enough price action to change the bias.

GBPUSD Short Reversal 4-21-2015

EUR/JPY Goes First Push With EU

The EUR/JPY made the push along with the EU so I will be bias for the short here also. The best levels is up at 128.38 but the Asian highs are valid since we have a 35 pip range already. I will be open for the long on the possible fake out but I will want to see the EU agree for confluence.

EURJPY First Push Down 4-21-2015

Forex News Today

The calendar only has the ZEW figures from Germany and the Euro Zone. I find it hard to believe they expect them to improve but they do so that is probably priced in and we will likely get a bigger move on a disappointment.

Asian session traders have Aussie CPI to watch out for tomorrow.

Happy Trading



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