WATCH OUT GUYS 👉 ALL THIS COULD REVERSE during the Press-Conference, which is why I decided to take a little bit of profit here and rather wait❗️
"The Federal Reserve kept interest rates and its monthly pace of bond buying unchanged Wednesday, even as it acknowledged an improved economic backdrop as vaccine roll outs gather pace."
It seems like the market has priced in a potential rate-hike (pretty unlikely to be honest, but the reaction shows it), which is why equities and majors vs USD are pumping.
As you can see, the FED still decided to keep its Bond Purchasing Programm unchanged 👉 They probably don`t do anything to cap yields, which WILL likely cause more inflation-worries and so a potential reversal of the current moves due to rising yields.
Let`s wait for Jerome Powell and see what he has to tell us!🙏
If he meontions yield-capping- we might see a continuation!
Comment
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IF you are EUR/USD short with me make sure to save profits ahead the opening of the NY-Session with +2,7% profit!
A rate-hike was more than unlikely and the market should have priced that in. More importantly is that the FED is doing nothing against the current inflation, which is the current worry of the market.
If they don`t add volume to QE or come up wit han operation twist then we might see rsing yields, whic hare good for the US-Dollar and bad for equities.
That was my concern ;-)
Amadiwochi
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@Trading2ez, You say many things, none of which have any value.. With all else equal/constant, The continuation of low interest is bad outlook on USA Period.
Trading2ez
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@Amadiwochi, Lol, where you sleeping the past 2 months?
Dude the reason for the previous dollar strenght were in fact the low interest-rates aswell as the provided liquidity.. in other words the dovish monetary policy as its causing INFLATION.
So why was dollar steady, while Jerome Powell says there won`t be any rate hikes in the next 1 - 3 years and that he doesn`t consider to do anything until inflation- and jobmarket-goals are achieved?
It is because the money-market claims higher interests as compensation for the potential inflation-risk. The last time that the market has expected this high inflation of more than 2,5% was after the financial crisis in 2008. This is why we see rising yields and a cashflow out of Gold into Bonds as soon as yields are steady. As the yield-curve was even inverted, Bonds were not attractive at all aswell as the US-DOLLAR. Alternative = Equities and Commodities FONDS that offers safe havens to customers were forced to get out of the bond-market ad will take every change to get back in their.
So if jerome Powell says "we won`t do anything" while the market is already worried about inflation, how do you think will they react to a more than obvious unchanged interest-rate?
Probably with more inflation-worries -> More interests -> Rising yields -> Cashflow into USD
A rate-hike would have caused a lot of problems in terms of debts so it was no option anyways.
More importantly is how Jerome Powell acts (either comfortable or nervous) and that he actually can sell the market that the current inflation is nothing to worry about. If thats the case the market will stop poking the FED.
We could continue talking but its way too much to consider and to talk about..