US DOLLAR - REVERSAL INCOMING? hey tradomaniacs,
As expected Jerome Powell causes huge moves in the market.
So what did he say and why is his statement causing such a sell-off? One thing is for sure, he is really dissapointing the market!
First of all, what could he have said to cause euphoria?
1️⃣He could have aoounced an prolongation of the Supplementary Leverage ratio (SLR) banks calculate the amount of common equity capital they must hold relative to their total leverage exposure with.
This could have calmed down the markets.
2️⃣ He could have announced an Operation Twist, which would probably have caused a boost for stocks and lowered the yields.
As explained, with this method the FED would sell short-term-bonds in order to buy long-term-bonds. YIELD-CAPPING without extra liquidity.
3️⃣ He could have announced a Yield-Curve-Controle in order to cap the yields with fresh liquidity.
This could have had an mixed impact, as it would drive inflation-worries due to extra liquidity provided by the FED but also cap the yields due to rising Bonds.
So what did he say? Nothing new, and he seemed to be pretty confident compared to the European- and Australian Central Bank.
1️⃣ Still far away from our goals, but job-market should improve due to vaccinations.
2️⃣ Expecting inflation to rise but it is still unknown whether this is going to continue or not as there are deflational effects. We have the necessary tools!
3️⃣Would be worried if financial condotions are getting worse. Rise of yields can have various of reasons.
4️⃣We won`t raise interest-rates as long as we haven`t reached our goals. We don`t have to take action as long as inflation isn`t lasting.
He keeps talking with a dovish tone, which is pushing the inflation-worries❗️
Result: Pumping YIELDS as Jerome Powell acts like there is no inflation 👉Stocks are bleeding and US-DOLLAR goes up!
Just ridiculous!😂
Will this continue? Tomorrow we will get to see the Non-Farm-Payrolls, and if they are worse than expected it could either confirm Jermome Powells statement and YIELDS finally fall or the market could even price in more inflation-worries and US-DOLLAR rises with YIELDS.
It will be interesting!
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Peace and good trades
Irasor
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Jeromepowell
USA will cause new World Financial Crisis, again. 1) FED Repo QE 2019/20 (higher than 2008 financial crisis)
2) Nearly 80-120% gain in TSLA & AAPL in 3 months
3) Mysterious Trade Deals/Talks
4) Rising GOOD price since months
5) Lemmings on buy a great fake economy is here
6) Indicators are overheating
We really don't see good, yearly economic gain.
Soon we will face a new financial crisis, created by USA, possible caused by repo-Market or Jerome Powel.
Have fun as long as the party goes on.
About the recession, markets immunity to good news & US GDPThe US and China have traditionally been optimistic about the progress in the negotiations, but apparently, the markets no longer respond to this. If you yell “wolf”, in the end, people will no longer come. Something similar we can see in the negotiation process between China and the United States. They have been optimistic for more than a month, but there is no breakthrough.
In this regard, we will continue to look for points for the purchase of safe-haven assets, which are providing excellent entry points.
We will bring up a topic of the upcoming recession. In yesterday’s review, we wrote about the forecasts of Societe Generale analysts who expect a recession in the spring of next year.
Recall, in March 2019 the so-called yield curve inversion took place (an anomalous situation when the yield on short-term US treasury bonds exceeds the yield on long-term bonds). As a rule, after this, a recession occurs within 12-18 months. Despite the fact that now the yield curve has returned to normal. In the spring comes the end of the countdown of 12 months. So analysts at Societe Generale are probably not mistaken.
Fed Chairman Jerome Powell, meanwhile, once again confirmed that the US Central Bank is likely to continue to hold a pause in interest rate policy actions.
Today, unlike Monday and Tuesday, will be quite busy in terms of macroeconomic statistics. First of all, we are talking about data on US GDP for the third quarter. Given that this is the second reading of the indicator, that is, the revised value, we do not expect any serious surprises. However, analysts do not expect as well, predicting the immutability of the preliminary assessment of 1.9%. In addition, you should pay attention to orders for durable goods in the United States, as well as the ADP report on the level of employment in the private sector. A busy day for the dollar will end with the publication of statistics on personal income and expenses, as well as incomplete transactions for the sale of housing.
Recall our position on the dollar - to look for points for sale for almost the entire spectrum of the foreign exchange market. But today we are acting with an eye on the output data. This is not about changing the direction of the trades, but about the possible emergence of more interesting points for its sales.