Sunday March 5, 2017 - 13:25:19 GMT
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Forex Trading Ideas For Monday 6 March 2017
Trading Ideas for 6 Mar 2017
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- The Friday Fed policy speech by Chair Yellen did not disappoint. Markets went into her presentation with 90%+ odds on a March 15 rate hike. Yellen went as far as anyone could reasonably expect to signal a rate hike. Afterwards, implied odds were virtually 100% in favor of a rate increase on the Wednesday after next. It would be a major shock now if they do not follow through with higher rates.
- As for the market reaction to her clear signal? There is and old saying in the markets, "Buy the Rumor, Sell The Fact". That is exactly what happened. The conventional wisdom in the markets over the past two weeks had become that the Fed Chair would signal a hike. So when her prepared text was released, it came as a surprise to no one. Traders who had bought USD expecting a rally in the currency were met by those already long looking to take profits, and that continued into the final moments of trading for the week. Markets position on new information, not on items already known.
- Heading into the new week, a major event will be the ECB policy decision Thursday. Many feel that the over-accomodative monetary policy of the central bank is well past its prudent expiration date. Traders are hoping to hear sometime soon that it will soon start to "taper" its asset purchases. This meeting is still probably too soon for such an announcement in the minds of Council members.
- Friday sees February U.S. and Canadian Employment data. It is highly improbable, but an unexpectedly very weak U.S. report could theoretically derail the March Fed rate hike, but I will not be betting on this.
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