Wednesday, August 30, 2006

Just waiting...

Ok, so there's not much to say about the EUR/USD today. Don't believe me? Open up a chart and you'll notice that the pair had a narrow trading range today. As you can guess, Alba didn't produce any trades because of the lack of movement so I eased my finger off the trigger and will wait for a better time to attack! (See chart below) I believe this range bound movement will continue until the NFP report on Friday unless there is a surprise in one of the other economic reports coming out before then.

The ECB is expected to keep their rates the same in tomorrow's statement and futures traders are betting that they will increase their rates at least 2 more times before the year end with the next increase coming next month.

After reading more about the FOMC minutes yesterday it looks like the Fed is definitely going to pause their rate hikes and may be holding them steady for a while. Some analysts are even saying that not only are the rate hikes done but that the next move will be to decrease rates. I never take analysts too seriously but it is interesting to see other people's opinions. However, looking at the federal funds futures it looks like there is an 80% chance the Fed will keep rates the same in September and about a 78% chance they will keep rates the same in October.

So why keep rates the same? Well, it finally looks like inflation might be contained. Weaker housing data, lower consumer confidence, higher energy prices all have had some part to do with that. Consumer spending has finally slowed with the rising fuel costs and the end of the housing boom. The Personal Spending report comes out tomorrow so that will be interesting to see. Other reports I will be looking out for will be the Chicago PMI and the speech by Bernanke.

As you know I exited my USD/JPY trade yesterday with about 50 pips profit on each lot. I also mentioned that technicals still showed upward movement on the pair but my fundamental thinking was that the USD would show weaker reports which would keep it from hitting my target at 117.71. Right now it looks like the USD is being defiant again as it is once again heading up towards my original target. I know I'm already out of the trade but I still like to see how things pan out.

All the other charts are garbage right now. Actually I take that back. The GBP/USD and AUD/USD both showed good buying momentum and I would've entered. Unfortunately both entries came at around 4am EST which is when I am in dreamland. You can't have them all!

So still no clear setups for me. I'll let you know if I see anything worth mentioning.

On a side note, I recorded the US vs. Germany basketball game but I haven't seen it yet. If I had to bet based on interest rate differentials I'm thinking we beat Germany :) I'll let you know if my calculations were correct tomorrow! That's it for me. Have a good day everyone.


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