Forex Forum Archive for 05/04/2013

Mtl JP 15:07 GMT May 4, 2013
Forex Trading Theme for the Week

john 14:20 re "The Fed ... future policy decisions will be data dependent."

And so stock markets (DAX, DJ , S&P at new highs) promptly and eagerly discount the future of continued money pumping and promises of more moRE MORE . In view of the trillions of "money" supplied ex nihilo, are the stock markets disconnecting from & mispricing the moribound real economies ? The money printers have a dangerous misconception that rising prices (and GDP) are somehow reflecting a growing economic activity.

These functionally disconnected market dynamics are the printers' fault, pure and simple. It is the policymakers' fault that stockmarkets just love bad data news. It is the CBankers' fault that they have trained players to expect that crappy economic data means more moRE MORE open money spigot and for longer. It is the CBankers fault if stockmarkets are addicted to expectations of liquidity provisions rather than pricing the real economy - something not lost on market - They are going to try to change the narrative away from the Fed is taking its foot off the accelerator, to the Fed is maintaining its foot on the accelerator. It could even press it harder - players like El Erian who seem to appreciate Ben and his gang's belief that direct meddling intervention to raise risk market (i.e stocks) prices makes folks think they getting rich and that that in turn stimulates economic activity.
a
How and when will Ben (or Yellen) go for an exit with such marketplayer dynamic ?aa

GVI Forex john bland 14:20 GMT May 4, 2013
Forex Trading Theme for the Week
Reply   

The latest week has seen some significant developments which came mainly out of central bank meetings. The ECB at long last finally is acknowledging that it has a major unemployment problem on its hands and that although it can support the economy by monetary actions, that its tools are unlikely to be terribly effective. Europe's economic problems are mainly structural and would likely be best addressed via fiscal policies. However, most economies have structual budgetary problems as well. On the monetary side, many had thought that ECB President Draghi Thursday had been hinting at the possibility of negative interest rates to coax banks to promote private sector borrowing. Early on Friday, ECB member Nowotny very clearly stated that this interpretation of Draghi had been incorrect. Later that day, Nowotny expressed surprise at the market's reaction to his comments on negative interest rates. Clearly he got a call from Draghi or a messenger of the ECB President. The significance of Nowotny's clarification was that it confirmed that the initial market assessment of Draghi had been correct. There has also been a lot of chatter that the ECB would not mind a weaker EUR

The Fed decision on Wednesday was down the middle, indicating that future policy decisions will be data dependent. On Friday the headline monthly U.S. employment report (after revisions) was stronger than expected. The data gave U.S. markets a lift, even though some of the underlying data were a bit troubling. Trade in the USD remains conflicted, but many feel ultimately it will trade higher. PMI data in the U.S. and overseas were mostly on the soft side.

Monday of next week sees holidays in Japan and the U.K. Following European PMI data on Monday, the calendar is not terribly eventful. For additional key items and more detail (dates, times, data estimates), be sure to visit the Global-View.com Economic Calendar and the Forex Forum as key items are released.

-- John M. Bland, www.global-view.com

dc CB 03:38 GMT May 4, 2013
Fixed Income

weekend viewing

Stop Making Sense

dc CB 01:32 GMT May 4, 2013
Fixed Income



ya...it's all OK

hey mr spielberg?