FED held rates steady
This was 100% priced into the market and we are beginning to learn the FED does what the market prices in. We have been repeatedly told that the FED is data dependent however despite a recent down turn the FED said the economy is still on track and they were looking through transitory news. The market has significantly increased the probability of a June rate hike, it is now over 80%. This is dollar positive
US Jobs, NFP 211,000
A really solid jobs report with the unemployment rate moving down to 4.4%. March figures were revised down 20,000 but the average is still well above what the FED say they need. Wage growth is still slow, it seems to be an ongoing conundrum with unemployment and wages low, in classical economics that should not happen.
Macron Wins in France
A fully priced in outcome has a muted effect and a major geo-political crisis for the Euro passes, the market will move on and quickly forget this event. Will fund flows into Europe increase as money returns to stocks and bonds? Time will tell but it could be Euro positive in the coming weeks, expect a grind higher for the near term.
UK Brexit Bill increases to 100 billion
This is a worrying development as the early negotiation sentiment sours, at the moment the EU are trying to bully the UK wanting the money before a trade deal, the Europeans have proved many times that they are prone to cave in when the going gets tough and with a slow growing economy it is hard to see how they would want to lose one of their biggest trading partners. The Brits on the other hand have a booming economy and rarely back down from a confrontation. Eventually the new iron lady will exit stage right and that will be Forex Armageddon
Greece and the EU reach a deal
Greece cannot and will never pay back what it owes, it wants lower interest rates and extended maturities but it did not get that just a few more Euros to meet the next repayments. Southern Europe remains the Achilles heal of the Euro, Greece will remain in a depression until it gets away from these debts and the Euro, constant re-bailouts only prolong the agony. Eventually something will crack and it will probably be the Euro itself.
US Auto sales collapse, GDPnow up to 4.3%
Auto sales in the US were down 4.7% last year, this is bad news for the carmakers and the banks who provide auto finance. A falling economy is the one thing that could hold the fed back. Could the Auto industry drag the economy down with it? Not according to the Atlanta fed who have predicted second quarter GDP to rise an amazing 4.3%. Trouble is they forecast Q1 at 3.5% and it came in at 0.7%, the fed know little more than the rest of us.
The weeks trading
A good week to start the month of May, I took 11 trades with 8 wins for a total profit of 326 pips. Monetary gains were down a bit due to the smaller trade sizes caused by a reduction in Margin offered by my main dealer. I expect next week to offer less trades, less pips but more money. All trades are posted live in the blog as they happen and many are signalled in advance in the trade of the day section.
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