SepTaper Worries, US Debt Ceiling, New Federal Reserve Chief
Here I am putting together the start of a road map of significant events to take place over the next 6 months, and how the US dollar might react to these events.
Our next Federal Reserve meeting has many implications. Traders/Investors are hearing about the possible September taper, or a more hawkish tone from the Federal Reserve. I am one of those that believe the Federal Reserve will not be hawkish at all, and most likely be more dovish.
Why?
For one Bernanke is leaving. Ben does not want to change course of direction. Bernanke has been the QE guy and will be remembered as the QE guy. Ben will leave the Federal Reserve in February 2014 without any changes in the Feds modus operandi.
Two... The US Debt Ceiling is going to be debated as we approach the 17 Trillion debt limit. The Federal Reserve will not add fuel to the fire by mentioning tapering going into a dangerous political event. If anything Bernanke will sound very dovish and keep the market tilted higher.
Now for the US debt ceiling. Congress, most notably the house of representatives are planning nuclear fiscal action if each other sides can't agree on budgets and debt limits. Republicans are ready to shut down the government and talk tough. These harsh words could cause the market to waiver and fall, probably not as much as 2011, our previous debt limit debate. I do expect the US Dollar DXY to have greater implications this time around. The timing of the Federal Reserve dovish remarks will probably push the dollar to the lower smaller channel inside the wider multi-year ascending channel. As we near the debt limit 17 Trillion I expect the US Dollar to move quickly to the upper resistance and most likely outside the smaller channel. This overshoot of the resistance, and if it hangs above the line for a week or two, will cause the market to revert back to the bottom multi-year channel. If Janet Yellen takes over the Federal Resever, we will probably see much more inflation in 2014. This will cause the Dollar to sink fast and Gold, oil, copper, food to rise quickly.
So this is my roadmap going into the next 15 months. Will evolve investment strategy and update charts if events were to change.
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** >>> I'm rethinking the inflation comment** Starting to see a long 14 year bearish cycle on commodities. Period of low U.S. bond rates and low inflation. Wouldn't be surprised to see us kickback a little if we run to 85+ and resume a bullish move to 90 DXY level.
Our next Federal Reserve meeting has many implications. Traders/Investors are hearing about the possible September taper, or a more hawkish tone from the Federal Reserve. I am one of those that believe the Federal Reserve will not be hawkish at all, and most likely be more dovish.
Why?
For one Bernanke is leaving. Ben does not want to change course of direction. Bernanke has been the QE guy and will be remembered as the QE guy. Ben will leave the Federal Reserve in February 2014 without any changes in the Feds modus operandi.
Two... The US Debt Ceiling is going to be debated as we approach the 17 Trillion debt limit. The Federal Reserve will not add fuel to the fire by mentioning tapering going into a dangerous political event. If anything Bernanke will sound very dovish and keep the market tilted higher.
Now for the US debt ceiling. Congress, most notably the house of representatives are planning nuclear fiscal action if each other sides can't agree on budgets and debt limits. Republicans are ready to shut down the government and talk tough. These harsh words could cause the market to waiver and fall, probably not as much as 2011, our previous debt limit debate. I do expect the US Dollar DXY to have greater implications this time around. The timing of the Federal Reserve dovish remarks will probably push the dollar to the lower smaller channel inside the wider multi-year ascending channel. As we near the debt limit 17 Trillion I expect the US Dollar to move quickly to the upper resistance and most likely outside the smaller channel. This overshoot of the resistance, and if it hangs above the line for a week or two, will cause the market to revert back to the bottom multi-year channel. If Janet Yellen takes over the Federal Resever, we will probably see much more inflation in 2014. This will cause the Dollar to sink fast and Gold, oil, copper, food to rise quickly.
So this is my roadmap going into the next 15 months. Will evolve investment strategy and update charts if events were to change.
****
** >>> I'm rethinking the inflation comment** Starting to see a long 14 year bearish cycle on commodities. Period of low U.S. bond rates and low inflation. Wouldn't be surprised to see us kickback a little if we run to 85+ and resume a bullish move to 90 DXY level.