Friday December 1, 2017 - 18:59:49 GMT
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Global Economic Recovery Building Steam. New Fed Chief A Dove
John M. Bland, MBA, co-founder, global-View.com
Economic Growth Accelerating Forex markets are in a state of flux as global economic activity appears to be gaining steam. This recovery has been uneven, and this lack of consistency has been reflected in a volatile lead EURUSD forex relationship. From early August until now, the EURUSD pair has traded a rough 1.1550 to 1.2100 range and it appears at the present time that the EURUSD is preparing for a run at the top of this range (1.2093). While financial officials generally keep mum about specific forex trading levels, we have been hearing pretty consistently that the ECB would like to see EURUSD capped at somewhere around the 1.2500 line.
Central banks have learned that it pays not to show their hand to the market lest a specific price floor or ceiling become a target for speculators. The preferred method for market manipulation these days has become covert intervention through hard to identify surrogates. In my opinion, if the ECB would like to cap the EURUSD at the 1.2500 area, it would be wise for the ECB to act quietly well before that price level is reached. Personally, I am NOT aware of any specfic ECB intervention at around the 1.2000 line, but it would not surprise me in the least if they have been in. As for the other side of this trade (USD), presumably the Trump Administration would be pleased with the economic stimulus a weaker USD brings as long as such weakness is not a source of imported inflation for the U.S.
Fed Chairman Designate More Dovish Than Yellen? I heard a top Chief economist from a prestigious Wall Street firm indicate Thursday that Fed Chairman-designate Powell has been "extraordinarily dovish" in his recent comments. It was this economist’s opinion that Chair Yellen would have been more hawkish than Powell in the new year. As for his confirmation testimony on Tuesday, most observers seemed to feel that Powell should have no trouble being confirmed. In his hearing, Powell tended to favor less regulation of the banking industry. Also, he did not have much to say about policy other than to imply that his Fed would provide continuity with the Yellen Fed. As for Powell’s dovish bias, one has to wonder if he got the job by promising to President Trump that he would favor accommodative policies.
As for current Fed Chair Yellen’s Senate testimony regarding the economy on Wednesday, she continued to express dismay at the low level of U.S. inflation. She also continues to blame the low level of Labor force participation on demographics (aging baby-boomers), but did not have a good explanation for the poor participation by working age members of the populace. Otherwise, Yellen was given much praise for her exceptional stewardship of the Fed in very difficult times. On this score, the FOMC is seen as a lock to raise its Fed Funds target range to 1.25-1.50% at its December 13 meeting.
Amazing Trader EVENT RISK Calendar:
Mon 4 Dec
22:30 AU- RBA Decision
Tue 5 Dec
All Day- global- Service PMIs
10:00 EZ- GDP
Wed 6 Dec
13:15 US- ADP Jobs
13:30 US- Productivity
15:00 CA- Bank of Canada Decision
15:30 US- EIA Crude
Thu 7 Dec
13:30 US- Weekly Jobless
23:50 JP- GDP
Fri 8 Dec
09:30 GB- Mfg & Ind Output
09:30 GB- Trade
13:30 US- Employment
15:00 US- University of Michigan (prelim)
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
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