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Central Banks

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Central Banks

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Reading between the lines for the USD

Last week I highlighted Governor Chris Waller’s speech – however the more I look into his talk the more it needs greater emphasis as it contained both hawkish and dovish elements.  The Hawk Waller indicated that he would need at least three more months of "good" inflation data before considering a rate cut. He was suggesting this might h...

November 1, 2024
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Where’s the Federal Reserve at?

Slowing Growth and Potential Rate Cuts: Recent economic data suggests a slowdown in growth, contrary to earlier expectations of reaccelerating growth and inflation. Federal Reserve Chairman Jerome Powell's statements and recent economic indicators point towards the possibility of lower policy rates in the near future. Key indicators, such as the so...

November 1, 2024
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Economic versus the Federal Reserve Policy Implications

Where’s the Federal Reserve at? Slowing Growth and Potential Rate Cuts: Recent economic data suggests a slowdown in growth, contrary to earlier expectations of reaccelerating growth and inflation. Federal Reserve Chairman Jerome Powell's statements and recent economic indicators point towards the possibility of lower policy rates in the near f...

November 1, 2024
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What a difference a (CPI) Day makes

We often talk about, ‘one piece of data does not make a trend,’ that ‘a headline is just a headline’ and that ‘assumptions are not facts.’ We feel this timeless market lesson has been slightly forgotten of late and the latest US CPI data may be case-in-point judging by the market’s reaction to the read. Let have a dive into the ...

November 1, 2024
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Disappointment with a capital D – watch out for overconfidence

There is a clear and present danger in trade at the moment – overconfidence. Overconfidence that policy and private capital will align and deliver trader a bullish windfall. However, from where we sit, this overconfidence should be defined as likely-disappointment. Let us explain. China 2024 is not China of 1994. After a week away for Go...

October 9, 2024
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When’s it our turn? A sustainable pivot

As we sit here and watch our overseas central bank counterparts move on interest rates. Our central bank gave us a new term, to explain why rate cuts are a long way off in their thinking. This term “sustainably” – that is  “sustainably back to target”, “sustainable path”, and a hundred other zingers that basically point out that the ...

September 30, 2024
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It Is Time – the other side of the mountain

In the words of one of the greatest supporting roles of all-time, this being Rafiki from the Lion King – It is time, (finally). We understand this is a bit tongue and cheek but the amount of false starts in 2024, we think it sums up what traders have been experiencing. So, we have reached the other side of the mountain. The cuts are coming. Th...

September 18, 2024
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The 3 Plays facing all Aussie Traders

We will do a deep dive into how to trade the upcoming US Federal Reserve meeting on Wednesday but for now we need to address the Fed and others from an Australian traders perspective as it is one of 3 plays we need to be mindful of. 1. Hard or Soft – Can we stick the landing? All central banks across the developed world are doing summersaul...

September 17, 2024
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Fed Pauses, Markets Rally: But What’s Next?

As expected, there was no change in the U.S. interest rate, with the decision to keep rates at 5.5% having been previously telegraphed and already priced in. As is always the case, markets dissected the statement and the subsequent press conference by Fed Chairman Jerome Powell to look for clues about what future Fed direction may or may not be. ...

November 2, 2023
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Markets Watch the Fed Decision Tonight – But Will We Stray from the Current Path?

After the BOJ's action yesterday, the ramp-up of earnings season, treasury auctions, and a flurry of data over the next few days—including U.S. jobs data—market attention will briefly focus on the U.S. interest rate decision this evening. Chairman Jerome Powell and the Fed members will conclude their two-day meeting today and release the la...

November 1, 2023
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Fed Interest Rate Decision – How might this move the markets?

It’s that time again, the looming US FOMC meeting is upon us. Once again, investors and analysts are confident that they know the result. With the rate currently at 5.50%, markets have priced in a hold, with the CME FedWatch Tool giving it a 99.6% probability of the second consecutive hold for the Fed. Let’s explore that 0.4% chance that ...

November 1, 2023
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Three Key Things Markets Will Be Watching This Week

As major indices continue to look weak and test key technical levels, ongoing market sentiment is difficult to judge, with several crucial information points coming up over the next few days. #1 The Fed Rate Decision The Federal Reserve's narrative remains hawkish in terms of medium-term interest rates. Friday's PCE data did little to calm fe...

October 30, 2023
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ECB Preview – Euro steady ahead of rate decision – EURUSD analysis

EURUSD is heading into today’s knife-edge ECB rate decision lacking any real direction after Wednesdays CPI inspired choppy performance. Markets are split on today’s ECB rate decision with money markets pricing around a 65% chance of a 25bps rate hike, but a slight majority of economists polled by Bloomberg expecting a hold. Against this backdr...

September 14, 2023
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The Economics of Currency Pegs: Stability vs. Risk

A currency peg is a policy in which a country's government or central bank fixes the exchange rate of its currency to the value of another currency or a basket of currencies. The pegged rate is enforced by the country's central bank, which will exchange currency at that rate. Commonly, countries that participate in this practice prefer to peg th...

August 14, 2023
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Understanding Monetary Policy: A Guide to Hawkish and Dovish Approaches

Familiarity with terminology used in financial markets is arguably highly important for those investing in financial products. This understanding can assist with both entry and exit decision-making in the context of an individual's risk profile and objectives.  Two terms that are often used to describe the overall position of a central bank are...

August 14, 2023
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