User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Wednesday May 5, 2004 - 18:17:53 GMT
Foreign Exchange Analytics - www.fxa.com

Share This Story:
| | Email

Greenspan's Siesta On Fed Funds

Greenspan's Siesta On Fed Funds (FXA)

On Tuesday I made the case for why the Fed should hike rates. I also said the Fed would not hike rates. Not as long as Senor Greenspan is calling the shots.

What did Tuesday's FOMC statement and inaction on rates say about the Fed and rates that is not obvious to the more than casual observer of the US central bank? Unfortunately, or fortunately, not much. The first point is the Fed and Greenspan feel perfectly comfortable with a 1.00% Fed funds rate even with inflation measures uniformly rising, employment growing and market rates rising. The statement also made it perfectly clear that the Fed will fire the first shot on rates when it is appropriate...it is neither patient not impatient. In this regard a jump in US April non-farm payrolls onFriday could put a June30 rate hike right on the front burner, and we doubt the Fed would try and talk the markets out of expecting a June hike. Conversely, a weak payroll number Friday would not only get the market to rule out a rate hike June30, but it would put an August10 rate hike in jeopardy. In other words the Fed and Greenspan in particular have the desired flexibility to raise rates or not to raise rates. Furthermore the markets have been put on alert. So when the Fed decides it is time to hike, no one should be surprised.

But isn't the Fed getting further behind the curve by not moving sooner than later? This crowd remembers the 1994 tightening cycle when the Fed went at rate hikes with reckless abandon taking rates up 275 basis points over 13 months before Fed funds peaked at 6.00%. And the cycle included one hike of 75 basis points. The Fed for its part has made it clear to insiders and the public at large that this is no 1994 all over again. One major difference is in 1994 the Fed was not using the written and spoken world as tools of monetary policy in any formal way to the extent it is today (call it transparency, though this is a Fed term, or perhaps controlled and deliberate manipulation).

And the Fed has a litany of reasons why the return of inflation is unlike any previous business cycle upturn...hence the gradualism, and hence ruling out 1994 deja vu. Slack in the labor market, excess capacity in manufacturing, high productivity, and increasingly rising energy prices, especially gasoline. Energy demand in the short- to medium-term is relatively inelastic and corporate profits and household disposable income takes a hit.

Fine. Makes sense. Wait a minute. Well it would make more sense if Fed funds were running at ECB level of 2.00% or even higher. But at 1.00%, the argument that the Fed is behind the curve is strong. And it was the Fed Chairman who in 2003 assured the last couple of rate hikes were insurance against deflation. Since declaring the end of deflation does it not make sense to remove this insurance? So far markets have largely given the Fed and Greenspan the benefit of the doubt on timeliness of tightening and level of the nominal (and real) Fed Funds rate. This blind faith could be challenged in upcoming data like payrolls and inflation reports for April and May, all of which will be in the hands of the FOMC by the time of its next meeting on June30. And if the data looks strong and suggests the Fed may be behind the curve, Greenspan and his compadres can verbally tighten ahead of the June30 meeting.

Something is missing in from the analysis. Something else is bothering the Fed and preventing even the modest of policy normalization steps. Perhaps Canada's Finance Minister Goodale hinted at it today when he said that at the G7 meeting officials were acknowledging the return of inflation and the inevitability of rising interest rates. Remember G7 central banks heads including Greenspan were at this meeting and presumably led this discussion. Goodale said "I think there was a desire around the (G7) table to make sure that as we face the prospect of increasing interest rates at some point in the future - obviously not immediately...- that it is managed in a way that is not disruptive." He added "Everyone needs to pay attention to the nature of debt portfolio that exists." And he added "A time of low interest rates is not a time to get careless and sloppy." Did Goodale come up with this on his own or was he parroting Greenspan? Sounds like the Fed and presumably G7 is really on tenterhooks on rates because it is worried about a credit market bubble and the distortionary effects on asset prices and allocation of capital in an extended period of extraordinarily low rates. Surely Greenspan would never be this explicit, even in the confessional booth of G7 (especially at G7).

David Gilmore
FXA

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 23 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Tue 24 Oct
All Day flash PMIs
Wed 25 Oct
01:30 AU- CPI
08:00 DE- IFO Survey
08:30 GB- GDP
14:00 CA- BOC Decision
14:30 US- EIA Crude
Thu 26 Oct
11:45 EZ- ECB Decision
12:30 US- Weekly Jobless
14:00 US- Pending Homes Sales
Fri 27 Oct
12:30 US- GDP
14:00 US- final Univ of Michigan

Forex Trading Outlook


Potential Trading Opportunities


  • POTENTIAL PRICE RISK: Medium Tue-- All Day Global flash PMIs. First good look at October economic performances.



  • POTENTIAL PRICE RISK: HIGH Wed-- 01:30 GMT AU- CPI. Top Inflation indicator.

  • POTENTIAL PRICE RISK: HIGH Wed-- 08:00 GMT DE- IFO Survey. Top German indicator.


  • POTENTIAL PRICE RISK: HIGH Wed-- 14:00 GMT CA- BOC Decision. No Policy Change Expected.


  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top Weekly WTI Statistic.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105