For today’s trading session, market participants were reluctant to place any aggressive bets in dollar-based or dollar-denominated assets ahead of today’s FOMC Monetary Policy Report & corresponding press conference.
Despite the release of a few market driving indicators prior to the US Opening Bell, there was still little follow-through in most “majors” as investors opted to sit on the sideline until the release of the FED statement & Chairman Powell’s Press Conference in the US Afternoon. Financial Markets have already priced in a cutting of the Fed Funds Rate by 25 basis point to a range of 1.75% – 2.00%.
So, all eyes are pointing to the bank’s monetary policy outlook on future rate projections, and their inflation & economic forecasts. According to the VIX Futures and other fear gauges, there appears to be a consensus that the central bank may not do or say enough to reinforce investor confidence and stem off the negative effects of on-going trade war and the global slowdown in economic growth. As a result, this is causing risk assets to settle slightly in negative territory and remain somewhat idle before the Fed’s statement. At the moment, the greenback (USD) is being supported and is one of the better performers in spot currencies for the Pre-US Market.
Early in today’s webinar, the Canadian CPI data was released, which reported figures that were slightly weaker than expected, with the year-to-year headline figure dropping to 1.9% y/y from last month’s figure of 2.0% y/y. The Canadian Core CPI, which excludes volatile food & energy, also fell by -0.1% m/m. Following the release of this announcement, there was a knee jerk reaction that caused our CAD/JPY sell trade to be stopped out prematurely, due to the widening spread, and price “fakeout” or false move that typically follows every important economic indicator. We executed another short CAD/JPY trade, with the same parameters, as soon as conditions warranted re-entry.
For most of the webinar, we reviewed price action in CAD/JPY, AUD/CAD, EUR/GBP, AUD/CHF, and GBP/CHF to identify technical setups that were forming in the market for trade entry.
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Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.