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.
There is a fair amount of profit-taking ahead of the long-awaited FOMC meeting release tomorrow, which the market sees as having a 95% chance of producing a hike in the Federal Funds Rate of 0.25%. This leaves the markets overall flat.
There were a couple of interesting developments at the end of last week which probably affected fundamental outlooks for the British Pound and the Euro. On Thursday, the European Central Bank announced a reduction of its QE plan, to take effect from next March. The monthly purchase will be cut from €80 billion to €60 billion per month.
The most interesting news within this weekend’s cycle has been
The Forex market has remained quiet all week with little going on. The major event in the calendar this week took place a few minutes before the time of writing, with the European Central Bank’s monthly announcements. As expected, they left interest rates unchanged and will leave the QE (quantitative easing) program in place until December 2017.
Two seemingly unrelated news items caught my eye this week. I see them as linked by a disturbing thread which makes me uneasy, as a citizen of democracies.