Tuesday February 21, 2017 - 20:16:36 GMT
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Forex Trading Ideas For Wednesday 22 February 2017
Trading Ideas for 22 Feb 2017
WEEKLY Forex Economic Calendar:
22 Feb Wed
09:00 DE- IFO Survey
09:30 GB- GDP
10:00 EZ- Final HICP
13:30 CA- Retail Sales
15:00 US- Existing Homes Sales
19:00 US- Fed Policy Minutes
20:30 US- API Crude
23 Feb Thu
13:30 US- Weekly Jobless
14:45 US- flash Service PMI
24 Feb Fri
13:30 CA- CPI
15:00 US- New Homes Sales
15:00 US- final Univ of Mich Survey
- Tuesday was another subdued trading session. I think traders in North America pulled back after the EURUSD opened up significantly lower in North America. Too many have been caught out in recent times by the stop algos. So they just backed of and traded a rough 30 pip range. Over the day, more Fed speakers reinforced (indirectly) the view that the central bank is mullimg a rate hike on March 15.
- Key data are still due over the week. Major items on Wedesday include the latest German IFO Survey, revisions to U.K. 4Q16 GDP data, U.S. Existing Homes Sales and the latest FOMC Minutes. The first round of PMI releases (flash) released Tuesday were mostly higher than expected.
- As for where the forex markets are headed, my focus is on market sentiment vis-a-vis economic growth in the U.S. The Fed appears to be embarking on a policy "normalization" path starting with a rate hike on March 15. Market odds on a hike are only 38%. Traders are windering if the Fed has the courage to go through with a rate hike. For Yellen to have any future credibility she should hike rates.
- I feel that equity markets are currently of two minds about U.S. economic growth. They are hopeful that the new U.S. administration will be able to come through with its promises, primarily a significant tax cut. However, the establishment opposition (in both parties) are doing all they can to sabotage and obstruct major reform. They have a lot to lose. In addition to tax reform, Obamacare is a quagmire. It is a financial disaster that is going to be nearly impossible to fix in the short run. Whether it all can be fixed will depend on how well Trump delegates power and on how strong his Cabinet will be.
- So the equity markets are of two minds. One is optimistic about growth and the second is pessimistic that major change will sabotaged by the establishment. The USD will be suported by positive prospects for growth and undermined by fears of no change.
- Fed Funds futures odds for a March Fed rate hike are 38% (88%). Markets now place the odds for rate hikes by June at 118% (12%). That is 100% for one hike (March?) plus 18% for a second move.
Risk-On Profile To Start The New Week's 21 February 2017
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