Tuesday June 27, 2006 - 11:24:28 GMT
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Black Swan Capital - www.blackswantrading.com
Coin flipping and bone throwing?
āFor if truth be at all within the reach of human capacity, ātis certain it must lie very deep and abstruse; and to hope we shall arrive at it without pains, while the greatest geniuses have failed with the utmost pains, must certainly be esteemed sufficiently vain and presumptuous.ā
FX Trading ā Coin flipping and bone throwing?
āThe rise in new-home sales [reported yesterday] adds to the dilemma facing the Fed: that while policy makers think the economy will eventually moderate, there is little sign of a real slowdown and inflation pressures keep ticking higher,ā the Journal said this morning.
Itās why the expectations for a hike have become so entrenchedā¦
āThe federal funds futures market sees a June 29 rate increase as a done-deal-plus: At 5.28 percent, the implied yield on the July fed funds futures contract suggests a small chance of a 50-basis-point move.
āThe odds of an August increase to 5.5 percent have risen to 92 percent from 0 percent as recently as June 5, a response to rising inflation and comments from Federal Reserve officials on its unwelcome nature,ā writes Caroline Baum of Bloomberg.
Tough odds in hereā¦
Good news on the German business front, more hawkish tones from the European Central Bank, and technically, one might think a near-term bottom at 12479 is in place for euro, looking at the chart below (but then again, 12330 looks interesting, yetā¦):
But, if itās still about rates, which we think it is, the level of euro bullishness in the market keeps the door wide open for a Fed surprise. There will be umpteen thousand Fed analysts interpreting āthe languageā of the Federal Open Market Committee statement on Thursday to tell us if there is a surpriseāwe wonāt need that, euro price action will tell all.
Jack Crooks, Black Swan Capital
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