Hawks In Bloom


PLEASANT SURPRISE - On balance, a more hawkish outlook from the Fed Wednesday, and the markets reacted accordingly. While the monetary policy statement still included the language that rates would remain near zero for a "considerable time," the Fed officially ended its quantitative easing program, was more upbeat with its outlook for the economy and also touched on the fact that the risks of inflation remaining below 2% had "diminished." The markets were expecting a more dovish Fed and I was impressed with the decision of the central bank to tilt to the hawkish side. I have said for some time that I believe the Fed should be moving towards rate hikes and should not wait until they are forced to do so. Better the Fed starts moving to higher rates on good news, than being pushed to do so because inflation starts running up and the economy is still sluggish.

IT'S STILL THIS ONE - So that's the good news from my perspective. The not so good news (but not bad), is that I don't see any new trading opportunities post the event risk. While the US Dollar has bounced back, currencies are still locked with recent ranges, and there is no clear sign of anything compelling. The closest thing to a new FX trade right now is EURCHF. You all know where I stand on this one. The market is still tracking just over the yearly low from September at 1.2045, and a break below would expose the all-important SNB barrier defense at 1.2000. I don't believe we see any big moves below 1.2000, and I am fairly confident given the strength of the SNB's conviction, we should see a strong intervention should we break below 1.2045. I think this could translate into a couple hundred points at a minimum, but the trick is having the patience and waiting to see if it actually plays out.

Hats off to the Fed for producing a commendable monetary policy statement. Via @joelkruger

ANOTHER TREAT - For the time being, here is another treat for you all. This is one of my absolute favorites. Although it is from some years back, it is still highly relevant and very entertaining. The documentary covers the working life of Paul Tudor Jones in his earlier years. Paul is one of the great speculators of our time and is well regarded as a person. Enjoy!


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