Tuesday January 29, 2008 - 13:29:21 GMT
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Black Swan Capital - www.blackswantrading.com
Where's the Fear At?
FX Trading â€“ Whereâ€™s the Fear At?
Is it that easy? Can the prospects for a government stimulus package alleviate all our economic concerns in one fell swoop? It would seem investors are starting to think so â€“ or at least hope so.
If doled out on time, the tax-break and paychecks are expected to bolster consumer spending by the second-half of this year. After all, we wouldnâ€™t want anyone to be saving money at a time like this, would we?
Markets have become noticeably calmer after taking time to digest the emergency 75-basis points Fed Funds rate cut a week ago. But given the potential financial bombs ticking away on balance sheets far and wide, calmness, or the return of low volatility, isnâ€™t something we would expect to last.
And donâ€™t expect a whole bunch of excitement ahead of Wednesday afternoon, either. Thatâ€™s when the Fed is due to wrap up its two-day meeting. Fed fund futures are still forecasting a 50 basis point rate cut. But in the wake of quieter markets, they may take the opportunity to cool down their pace of easing. Who knows? And would it matter if you did know?
Plenty of economic releases are on tap for this week with the potential to stir things up. The heavy artillery arrives on Friday when we learn of the January employment situation aka the â€śjobs reportâ€ť. A weak jobs number would mean the R-word becomes consensus forecast for the two or more handed economists everywhere.
We get durable goods and consumer confidence this morning. A large deviation from expectations and the durable goods report could cause the markets to move; but I wouldnâ€™t expect much. Same goes for consumer confidence â€“ the markets may bite on a reading thatâ€™s significantly better than expected. After all, investors are searching high and low for any news that could slingshot stocks higher.
As for the dollar, itâ€™s been unable to sustain its rallies and is on the verge of testing its all-time lows.
[Chart not available in text format]
A break below this narrowing range means the dollar will likely test its all-time low. But then again, if the dollar can get through this data-intensive week without failing at key support levels, then it could surprise.
John Ross Crooks III
Black Swan Capital
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