Fed Meeting Set To Show The Way

The next installment of the Federal Reserve meeting, with the press release that is published at close the meeting of the Monetary Policy Committee. This is followed by a press conference hosted by the president of the Fed, Janet Yellen. All eyes are on comments surrounding interest rates, and how the Fed see’s the economy is fairing.

Today on the foreign exchange market, the Euro was trading within narrow ranges despite the huge adjustment in policy by the Bank of Japan (BoJ). Although it is normal for the Euro to trade static in light of a upcoming Fed meeting.

The euro has remained steady against the dollar at 1.1149 and versus the Yen at 113.03

During the night, the Bank of Japan (BoJ), the Monetary Policy Committee announced new measures. The BoJ has decided to adopt a target on its long-term interest rates. This change in its monetary policy strategy is a surprise, three years after the launch of a bold policy of the Governor Haruhiko Kuroda, who gave way to skepticism about its effectiveness.

According to analysts the objective is to try and counter the negative effects of redemption of bond assets in bulk, pulling the short interest rate and longer term under 0.

In the USA, Fed funds futures anticipate a rate hike this evening with a probability of 15%. From the many economists surveyed by Bloomberg, only 4 anticipate a rise in Fed Funds tonight, barely 4% of consensus. Which is usually a sign that there will be no change, however there is always room for a shock.

As always expect volatile moves after the Fed release their data. Stocks, Gold and Foreign Exchange markets are poised to make a move, guessing can spell disaster. Whilst these data sets can change a trend, more often than not they do not change the longer term direction, once the initial volatility has subsided.

from http://www.livecharts.co.uk/livewire/2016/09/fed-meeting-set-to-show-the-way/

FTSE 100 and Dow Jones: Can They Head Higher This Year?

Indices in the UK and USA have been on a phenomenal run since the early February, a rise that accelerated with post Brexit relief. Whilst the FTSE 100 stumbled its way up slowly in anticipation of the Brexit vote, the Dow Jones Industrial Average has been strong all the way through, really strong. So much so that it’s now standing at all-time highs above 18400.

But what is next for these blue chip indices? Can this strength continue, or will it all end in tears?

FTSE 100 Index

Banks are still lagging somewhat. And so are home builders, since being hit with uncertainty of Brexit. Although they’ve recovered slightly from those lows, there’s still room for more in the main players. Barclays share price remains under £2, Lloyds share price remains under 60p. If banks can begin to shed some of the negative sentiment that Brexit brought them, this could help push the FTSE 100 higher into winter.

The chart below shows the breakout point of the early 2016 high and subsequent rise to a touch underneath 7000. Will it push multi-year highs like its US cousin? Probably, but only if banking stocks and home builders begin to pull their weight again.

Dow Jones Index

Stocks in the Dow Jones are flying, it’s fair to say. Bank of America has put on near to 50% this year alone. The Home Depot printed a new all-time high, as did General Electric Company. Whilst Apple has stuttered compared to previous years, other tech stocks like Microsoft Corporation have been in a strong upward trend.

In the chart below you can see (like the FTSE 100) a breakout of early 2016 high into a small wedge like pattern which seems to be consolidating at new all-time highs.

Will it push higher? This is a tricky question. Its election year in the USA, and there’s no hiding from the fact that if Trump gets into the White House, this will bring uncertainty. The US markets are usually strong running into elections, which seems to be the pattern right now, whether this will continue post-election is the million dollar question.

One thing to watch: If Trump wins the election there will most likely be a rush of money into Gold from Stocks. Keep an eye on Gold as we approach the election, it may give some clues as to which way traders are placing their bets.

from http://www.livecharts.co.uk/livewire/2016/09/ftse-100-and-dow-jones-can-they-head-higher-this-year/