Well, it’s the day after Christmas Day but a lot of people are still on holiday, either because the day after Christmas Day (known as “Boxing Day”) is a holiday in some countries, or because Christmas Day fell on a Sunday so the next weekday is given as a holiday in lieu (this is what is happening in the United States today).
While reading the news earlier today, I saw a guru at UBS make a client-directed market forecast which seemed reckless and irresponsible to me. I’ll get into the details a little further on. This rang a bell in my head, and checking back to my post of 29thNovember, I wrote about another guru, also at UBS(!), who made a similarly ridiculous Forex forecast: that the USD/JPY currency pair would stand at 98.00 by “this time next year”.
I read something interesting this morning that I thought most of us can learn from. It certainly impressed me. I won’t mention the author or the name of the book as he is extremely fussy and hates to be quoted by writers like me. Suffice to say, it is not an original observation on my part, nor is it research to be attributed to me.
The major theme of the market over the past 24 hours has been a relatively small but meaningful increase in the value of the U.S. Dollar, which just made a new 13-year high against the Euro. There have been a few headline-grabbing events, although none of them appear to have affected the markets to any dramatic extent.
Today, the elected members of the U.S. Electoral College will cast their ballots for the next President of the United States. The procedure is a relic from the early days of the United States, and is widely misunderstood. The U.S. Constitution was created with a provision for an executive branch of Government, headed by a President.
One of the most straightforward and well-proven ways to trade is to follow trends, buying dips in uptrends and selling rallies in downtrends. The beauty of trading in this way is that, although it can lose money in the short term, if you follow some precautions and let your winners run, it is the easiest way to make money over the long term.
For only the second time in the last ten years, the Federal Reserve has now raised U.S. interest rates. That move was a virtual certainty, so there is not much of note there. The market’s focus instead is on the FOMC’s forecasted future rate hikes, which have increased from an anticipated 2 during 2017 to 3, with the long-term interest rate now seen higher at 3%.
The big day is finally here. The Federal Reserve has a 95% of hiking interest rates by 0.25%, and will also announce its forecasts for the U.S. economy over coming months.