Fed Loses Patients And Cuts Growth March 19, 2015
No FOMC Rate Hike In June, Probably Never
Although the Fed did lose the word patience in the statement they also signaled that there is about zero chance of a rate hike in June by cutting GDP growth from 2.6-3.0% t0 2.3-2.6% for 2015. In other words they have more or less admitted that there is no recovery and as such they will not be raising rates any time soon. The miracle they/we have all been hoping for as they fudge the data the best they can to make people think “every thing is awesome”, so they start spending money they dont have once again, just hasn’t come to fruition. So in classic Bizzarro World style as the Fed admits there is no recovery the buying spree spikes. Summed up rather clear from a ZH article this morning.
Oil spiked 6% because “The Fed said the economy is slowing”; Stocks are up because “The Fed said the economy is slowing”; USD strength is a signal of the strength of the US economy which “The Fed said is now slowing”; Small Caps hit Record Highs because “The Fed said the economy is slowing”; and Nasdaq Tops 5,000 because “The Fed said the economy is slowing” – really only one thing for it…
EUR/USD Spikes Over 400 pips On Growth Cut
With a 400+ pip spike on the EUR/USD there is only one way to treat this for the rest of the week and that is being open on direction looking at how they play the Asian range during London. The Euro is still fundamentally weak considering the potential Greek exit just over the horizon but with the confirmation that the US is not the cleanest shirt in the room this pair has a better chance of whipping around as the tape bombs come in. We dont have any decent levels in proximity so I will be waiting for the Asian range to form and see if we get any set ups at those levels or have conviction beyond to show some direction.
Bda UK Data Along With Fed Causes 500 Pip Run On GBP/USD
The GBP/USD is in a similar predicament with the 500+ pip run but at least it has some daily levels to watch so I will prefer to trade this pair during the London session today. The test of 1.5005 level this morning looks good for a short along with the Asian lows for a long considering we already have a wide Asian range this morning. Otherwise any conviction during the London session will make direction clearer.
EUR/JPY Limited By USD Weakness
I have to admit that the correlation between EUR/JPY and the EU held up better than I expected although the move was held back somewhat by a drop in USD/JPY. Considering the BOJ is pretty much hamstrung this will likely continue unless for some reason we get more erratic movement from the UJ. This pair also has some levels we can watch for an entry today with 129.96 for a potential long but I would like to see the test during Asia first. Otherwise they may just hold the current Asian lows during London later today. Otherwise I will be looking for the potential short from 130.63
Forex News Today
The calendar is rather quiet today with only the ECB Monthly Bulletin during the London session which is likely to just reflect what was said in the last meeting. Otherwise there is Thursday US Unemployment Claims that could get them pushing. While a surprise to the upside probably wont cause much USD strength if it disappoints then it probably wont take much to create heavier USD weakness. Later there is also the Philly Fed Index expected to rise but considering all the late bad data and consistent disappointments from this release I see a higher probability of a disappointment of which would add to USD weakness as well.
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