Markets Hesitate On Vague Fed Minutes May 21, 2015
Fed Minutes Vague As Usual Trying To Find Excuses For Weak First Quarter
In a some what expected fashion the FOMC Meeting Minutes were vage at best as they try to find ant reasonable excuse for the weak GDP figures in the first quarter saying the weakness is transitory. What the heck does that mean? Other than they will be taking another look to see if the seasonably adjusted figures need to be seasoned again. In their defense I will agree that typically the first estimate has a habit of being low but considering the data I have my doubts it will be doubled like Steve Liesman thinks.
“The government agency charged with calculating the nation’s growth rate is acknowledging problems with its numbers and pledging a series of fixes over the next several months”, Steve Liesman reports, confirming that the BEA is about to do precisely what we predicted two days ago and seasonally adjust its seasonally adjusted data in what might very well be the most blatant instance of goal-seeking in the history of statistical analysis.
Several economists, including researchers at the San Francisco and Philadelphia Federal Reserve banks and many Wall Street economists, have since confirmed CNBC’s findings. Many attribute the problem to what is known as “residual seasonality” which are seasonal patterns that remain in the data even though it is already adjusted for seasonal variations.
Ok so they are going to UN season it. My question is why is it already over seasoned? In a day and age when GDP should be as accurate as humanly possible I find it hard to believe that they are stupid enough to not know its over seasoned.
Now to the FOMC joke. We shouldnt expect anything but vague statements from the Fed these days because they have shown that they really want to raise rates. Even if its only to have room to lower them before the next round of QE. Therefore even though data has been crap they did say they arent ruling out a rate hike in June and they even got Hilsenrath to say they will. Or did he?
EUR/USD Shows Bottoming
With the EUR/USD showing the bottoming yesterday I will be more open for the long today. The pushes arent anything close to clear and with a looming Greek default the probability that they hold this range is good. However if they do start thinking that the Fed will not be raising rates then the EU should rise since we have a few weeks to see if the Troika and Greece can strike a deal. The fact that they think they can contain risks seems to have lessen any effects of Greek tape bombs like we saw yesterday.
GBP/USD Conviction With Intraday Push
Although Im not really excited to see the GBP/USD showing an intraday push to the upside it does show that they have some conviction on direction even if it was only to run a test of the hourly 200. I will be slightly bias for the long here today but still open for the short at 1.5567 or just above at the hourly 200. The safer long would be from the lows around 1.5486 but I will be open for a clear set up at 1.5525 that has the proven support yesterday and test during Asia this morning.
EUR/JPY Bottoming Formation Holding
The bottoming on the EUR/JPY holding well yesterday does suggest it has a better chance of pushing up from the range today but if the EU cant go with it then it will likely be limited. I wont have a bias on this pair and look mostly to the extremes for an entry. The safest short will be from yesterdays high since we already have the 134.70 not getting much reaction. The best long will be from the lows around 134.06 but I will be open for a long at the 134.35 level if we get some Euro strength coming in during the London session.
Forex News Today
The calendar is busy with Manufacturing and Services PMI from France Germany and the Euro Zone. Expectations are mainly flat so any big surprise should get them moving the Euro today. To get any sustained move the German or EZ data will need to drop close to or below 50. Later the UK has Retail Sales data expected to rise above the zero print last release. Considering sentiment being positive a miss to the upside will need to be larger to get a sustained move while any disappointment below zero more negative as the sentiment gets taken back. Just before the NY open the ECB releases its Meeting Minutes as well but I dont expect much unless there is a big deviation from what was said in the statement.
The US has Thursday Unemployment Claims expecting a rise. If it does manage to drop it should be USD positive but how much will be limited unless its a big miss. Later is the Philly Fed Manufacturing PMI expected to improve so a disappointment should have the larger impact. Later is Existing Home sales also expecting improvement. This has a better chance of being as expected or better considering recent housing data.
As if all that wasnt enough for one day the icing in the cake will be from Super Mario having a speech after the London close.
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