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Business/Finance See other Business/Finance Articles Title: Green Lights for the Greenback Green Lights for the Greenback Boris Schlossberg | Wednesday, August 31, 2016 at 4:30 pm What a difference a few words make. Just a couple of sentences from Janet Yellen on Friday and suddenly the dollar is hot. The greenback gained more than 200 points against the yen and euro since the start of the week, all due to the following section in Ms. Yellen’s speech … “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months.” That’s all she had to say at Jackson Hole to turn sentiment in the forex market around 180 degrees. The fact is no financial market in the world has been more skeptical of the Fed than the forex market. Even in the staid fixed income arena, yields have started to inch up as U.S. data and the Fed’s rhetoric started to turn hawkish this month. But currencies refused to believe the message from the Fed until Ms. Yellen spoke on Friday. Her words were hardly definitive, but coming from such an unrepentant dove as Ms. Yellen — they carried weight — suggesting that the Fed is likely to move on rates sooner rather than later. The greenback is looking good. I was always under the impression that the Fed would never dare to hike rates in the middle of a Presidential election campaign, but history proves me wrong. The Fed has moved on monetary policy even during the final month of the election and may do so this year as well, despite the very partisan nature of this year’s battle. Ironically enough, Ms. Clinton’s commanding lead could provide the Fed with the cover to act in September since its policy move is unlikely to have much political impact this season. For Ms. Yellen, the far greater concern may be the credibility of the Fed itself. With Fed officials delaying the normalization process by more than a year, they have lost a tremendous amount of market trust. That’s especially true in the currency market, which appears to have been operating on the Missouri motto – show me. With U.S. data demonstrating steady growth in both wages and jobs, the Fed is feeling the pressure to act. If they move in September, they could buy themselves another six months and observe the economy without being forced to act again. No financial market has been more skeptical of the Fed than the forex market. That’s why this week’s employment number looms so large. A good print of 200K new jobs would provide the Fed with the cover to act now and will relieve the pressure on the Fed for several months to come. Another disappointment, however, will deflate the dollar rally once again and will only fortify the skepticism of the dollar shorts. But for now, it’s all green lights for the greenback. Happy trading, Boris Schlossberg Poster Comment: My ex partner in Chicago used to keep the 100s on the outside if his wad. I guess he wanted to be a show off. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: BTP Holdings (#0)
Sounds like good news, this?
_____________________________________________________________ USA! USA! USA! Bringing you democracy, or else! there were strains of VD that were incurable, and they were first found in the Philippines and then transmitted to the Korean working girls via US military. The 'incurables' we were told were first taken back to a military hospital in the Philippines to quietly die. – 4um
When you consider that the U.S. Dollar has lost between 92% and 98% of its value, depending on which website you look at, then yes, this can be considered to be good news. ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
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