The consensus among the various commentators of things market related
seems to be that Janet Yellen (pictured above at the event) did not put a foot
wrong in her presentation to members of the US Congress yesterday, and in her
handling of questions afterwards.
The big takeaway is that tapering of Quantitative Easing (QE) is now a
done deal before the end of the current twelve months, barring some very
significant economic shock. It is our belief that tapering has actually been
priced into currency exchange rates and is no longer a factor that can be used
as a basis for trading. Alternatively, the fact that the Federal Reserve is at
pains to emphasise that interest rates will be kept low for the foreseeable
future makes it (tapering) almost totally irrelevant.
At the same time the equity indices seem to have recovered their mojo
and emerging markets are no longer in what has been termed turmoil. The Turkish
Lira against the US dollar (USDTRY) chart is shown below. Although the TRY had
been steadily losing value for some time, it was only in the last two weeks of
January that this qualified as turmoil, triggered by some less than stellar
economic reports out of China .
This in turn provided the cue for the equity indices to have their long overdue
correction. However, as can be seen, USDTRY is now coming back to something
approaching normality.
Trade thoughts: Aussie / Kiwi (AUDNZD)
Regular readers will know that we classify a trend as a series of higher
highs and higher lows, for an uptrend, and lower highs and lower lows for a
downtrend. The four hour chart of AUDNZD shows the formation of just such a
pattern. The fundamentals of these two pairs would also indicate that the
recent upward movement might be due to come to an end. We highlighted them here.
There is one update since then in that the Reserve Bank of Australia has
gone from an easing (tending to reduce interest rates) bias to one of
neutrality. This might not be enough to change the basic relationship between
the two currencies and the long term trend is still very much to the downside.
We have placed a conditional (pending) order which is set to trigger if
the price falls to the rate indicated by the ENTRY line. A Stop Loss (SL ASK) has been
placed at the level shown, which is associated with the pending order. If price
goes back above this level before the trade is taken, in other words before
price falls to the ENTRY line, the Silver Trigger routine, which is running in
the background, will abort the whole trade. This will happen even if yours
truly is deep in Slumberland, which he is likely to be at the time when the
markets are in full flight in Wellington and Sydney .
Important disclaimer: None of the commentary here constitutes investment advice. It is for educational purposes only. There are many countervailing views on the way the market might move and no one, not us or anyone else, can foretell the future. You should only trade with money you can afford to lose. It is important that you make money management and the control of risk the cornerstones of all your trading activity.
Important disclaimer: None of the commentary here constitutes investment advice. It is for educational purposes only. There are many countervailing views on the way the market might move and no one, not us or anyone else, can foretell the future. You should only trade with money you can afford to lose. It is important that you make money management and the control of risk the cornerstones of all your trading activity.
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