Saturday March 19, 2016 - 10:31:34 GMT
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Federal Reserve: Who's On First?
John M. Bland, MBA, CTA
Fed Changes Direction
Financial markets were blindsided once again by the latest Fed decision. Last Wednesday, the central bank unexpectedly announced a fundamental shift in policy. Fed Chair Yellen indicated that Fed Bank Governors have reduced their expected path of Fed Funds rate hikes to two this year from the previous four. This change finally put the central bank more in line with what the Fed Funds futures markets have been pricing for many months. Perhaps as important, she also indicated that the focus of policy now will be geared more towards global growth and away from purely domestic considerations. This is a major game changer, as it signals a slower policy tightening path than earlier signaled. Some are speculating that part of the change in policy might come from an unannounced behind the scenes G20 agreement to weaken the USD.
Current Market Conditions
Whether we are in a "currency war" or an engineered G20 USD depreciation remains to be seen, but what is clear is that top central banks are very concerned about the slow pace of global economic growth and this is being reflected in a further move away from inflation targeting and an emphasis on promoting full-employment. As for trading, forex markets generally have been following the lead of crude oil and equity markets.
The week ahead sees most key market centers closed Friday for Good Friday observances and several shut on Easter Monday as well. That means key economic data will be front-loaded in the period.
00:00 JP- Holiday
All Day- EZ/US- flash PMIs
01:35 JP- flash PMI
09:00 DE- IFO Survey
09:30 GB- CPI
10:00 DE- ZEW Survey
14:00 US- New Homes sales
20:30 US- EIA Crude
09:30 GB- Retail Sales
13:30 US- Weekly Jobless
13:45 US- flash Service PMI
23:30 JP- CPI
All Day AU/NZ/EZ/CH/GB/US/CA Holiday
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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