Cold Trading and the Politics of Central Banking

COLD TRADING - One of the best parts of relying on the charts as a foundation for my trading, is the fact that I don't need to really concern myself with all the fundamentals until it's necessary. The technicals are a great way to filter out the stuff that many might think is important, from what's actually important TO THE MARKET. To be clear, this is not how I aspire to conduct myself in life. Not being sensitive to the worry of those around me, would be a cold to be in my personal life. But we're talking markets here. In markets, I don't want to be watching anything if it ain't moving. No volatility. No reason to trade. And so, while there is certainly a lot of tension out there right now, ultimately, the Euro is stuck in a range and doesn't seem to be bothered or ready to make any decisions. Until we see a break, there's nothing to talk about, and from the perspective of a trader, it's just noise.

cartoon jul 26

DRAGHI'S BATTLE - But we could be getting very close to seeing some movement and that could happen as soon as later today. Later today we get the always volatile ECB decision and what became abundantly clear at the last ECB decision, was that Mario Draghi was ready to go out of his way to combat US efforts to weaken the US Dollar. The ECB doesn't have any desire to see the Euro appreciate on soft Dollar policy that would deal a blow to European exports and Draghi went out of his way at that last decision, when he caught the market off guard and issued a blanket statement there would be no rate hikes from the ECB until the summer of 2019 at a minimum. This was highly unconventional and clearly underscored the politics behind the decision. And so, the market will be more ready for it this time round, but we should definitely expect more of the same from the ECB today.

Expect more of the same political central banking when the ECB meets later today.

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