As widely expected the Fed Funds target was raised last night by 25 basis points so that the target lending rate lies between 2.00 and 2.25 per cent. But chair Jerome Powell was quick to point out this did not mean a change in the path of rate hikes. He also inched up forecasts for the economy and said he didn’t see much in the way of inflation. Though some analysts think that over the coming year Fed Funds might be over 3.00 per cent, the futures market is expecting them to peak at 2.83 per cent. Bond yields dipped on the news.
In a survey out yesterday, since the Brexit referendum only 630 UK finance jobs have moved abroad. Prior to this date estimates put the exodus at hundreds of thousands. A Reuters poll of 134 major UK-based finance companies, current estimates are that another 5,800 jobs might move to the EU in the case of a no-deal result to negotiations. On the other hand, today Goldman Sachs is launching an online only retail bank in Britain. Called Marcus (the first name of the founder of the investment house) it will open accounts with just £1 and pay interest of 1.5 per cent APR.
DAX 30
Hanging under the trend line like little bats in a cave. The commodity channel index has yet to turn down.
SHORT TERM TRADER: Short at 12330; stop above 12460. First target 11900.
POSITION TAKER: Square.
FTSE 100
Still hovering at the 50 per cent retracement level and the commodity channel index has yet to turn bearish. Yesterday Deutsche Bank dismissed rumours that it was looking for a tie-up with either Commerzbank or UBS as ‘fictions of the press’.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at an average above 7300; stop above 7535. Target 6925.
S&P 500
Dipping back inside the right-angles triangle with a tiny shooting star candle yesterday.
SHORT TERM TRADER: Square
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Bullish momentum all but disappearing after yesterday’s little doji and today’s slip.
SHORT TERM TRADER: Long at 1.3105; stop below 1.3050. Target 1.3300.
POSITION TAKER: Long at 1.3110; stop below 1.3000. Target 1.3600, maybe more.
EURO/US DOLLAR
Bullish momentum nearly all gone as we slip back to the top of the old, big triangle. A tricky day for the euro today as the Italian government presents next year’s budget. In order to start implementing election pledges, it may well have to exceed the 3 per cent EU mandated annual budget deficit cap. Also look out for economic forecasts and numbers used as these may be figments of fiction. Finally, the EU has almost no track record in reprimanding countries which don’t comply.
SHORT TERM TRADER: Long at 1.1780; stop below 1.1600. Target 1.2000.
POSITION TAKER: Square.
GOLD
Adjusting the long term-trend line in order to capture the recent high.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 1194; stop above 1215. First target 1160.
