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Markets Should get off to Slow Start Monday Due to Holidays. No Major Data
|Markets Should get off to Slow Start Monday Due to Holidays. No Major Data|
April 21, 2014 00:00 gmt
CALENDAR: US- Leading Indicators
| EURUSD 1.3810
|| U.S. 2.72% +8bp
|| North America: Higher|
| EURJPY 141.44
|| Bund 1.52% +3bp
|| DAX: Higher|
| GBPUSD 1.6788
|| GILT 2.70% +6bp
|| FTSE: Higher|
| USDJPY 102.38
|| JGB 0.61% 0bp
|| Far East Close: Mixed|
HIGH IMPACT NEWS ITEMS: None
- The week ahead should get off to a slow start due to holidays related to Passover and Easter. Monday is a holiday in much of Europe.
- One possible watershed event last week was that Fed Chair Yellen sent a misleading signal after the last FOMC meeting in mid-March with an off-the-cuff remark that the central bank could start to tighten policy about six months after the "tapering" of its Asset Purchasing Program has been completed. That would have projected to mid-2015, or about a year and a quarter from now. In a speech on Wednesday, March 16, Yellen indicated "that, while significant progress has been made, the FOMC does not expect to fully meet its dual mandate for another two years or more."
- Yellen had misrepresented the thinking of the FOMC in mid-March, but that her latest comments represent an updated FOMC view. In other words, they is not expecting the economy to rebound as quickly as it had expected only a month ago. Now the markets have to incorporate this new information into its current thinking. As for the two-year time line, this is you cannot trust.
- This change in Fed policy view illustrates why providing calendar-based forward guidance is a fool's errand. It can't be done with any semblance of reliability. From a trading perspective, be aware that all policy decisions are data-dependant, so it pays to keep an eye current developments.
- In recent weeks, Eurozone leaders and ECB officials (including President Draghi) have been sending signals to the market that the EUR has gotten too strong, While it might be too strong for investment or reserve management purposes, it clearly is too strong from a trade competitiveness and full-employment point of view.
- We have felt for some time that a weaker exchange rate would be an obvious policy objective for the ECB. As for monetary policy lower rates and quantitative ease (QE) seems now to be in the cards. Traders should be alert to the RISK for a downside move in the currency.
- One highlight of the week will be the Wednesday release of April flash PMI data from all parts of the globe. Flash PMI data estimates generally tend to wind up close to the final reading. Canadian (Wednesday) and U.K. (Friday) Retail Sales data are always key releases. Thursday sees the major German IFO Survey results. The final April University of michigan Survey is released on Friday.
- Be sure to refer daily to the Global-View Economic Calendar For key items (actual data, selected charts, etc.) as they are released. See the FOREX FORUM. for comments from experienced traders to events as they happen.
FX Trade Talk: What's moving markets-- Expert Commentary, data. and data charts posted continuously on FOREX FORUM
John M. Bland, an author and a founding partner of Global-View.com, has been a corporate FX consultant for a major N.Y. bank, a forex trader for a major N.Y. institution, and an FX analyst for a blue chip Fed watching service. John has an MBA in International Finance and an A.B. in Economics from the University of California at Berkeley.
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