I decided for a change this week and write a short blog.
Whilst the ZOOM option is less time demanding, my circumstances meant that I had time sitting around waiting away from my office at the end of last week and rather than read, I thought why not write, so PowerPoint and Trading View have been ditched.
Last week was another example of the markets being jitterish, we saw USD strength but is was FED HAWKS that really hit the markets with what it probably did not want to hear.
I have often said of late, visual and verbal’s are much more powerful that written words or stats vis-à-vis the market participants at the moment. Laziness, complacency who knows but a good sound-byte always gets things moving.
Ironic that I chose to write and not audio/visual this weekend!
SO FAR 2023, THE YEAR OF THE FLIP-FLOP
Last week, I spoke (via ZOOM) with two trading groups discussing the markets 2023 so far. I must admit heading into the discussion, to have a title “2023 SO FAR”, it felt a little weird on the basis that we are only 6 weeks into the calendar year. Nevertheless, off I went armed with my folders of analyst, bank, and financial institution opinions.
They were great sessions; my group partners whilst using the whiteboard facility on zoom were able to highlight for everyone that so far this year the major influential bank opinions in the FX market have flip-flopped twice this year already and we predict a third.
Let me put more flesh on the bone....
To keep brevity in place, here I will only highlight FED interest rate policy and terminal rates.
Q4 2022, all the major financial opinions for 2023 were released by the major financial institutions and I recall commenting on these in generalist terms stating that we seem to have a broad agreement on the FED terminal interest rate. There were one of two not in the herd of opinion but generally speaking most institutions were in a tight range/ zone of opinion.
Basically, about two weeks into the 2023, all change most opinions for 2023 were re-written on the back of US CPi data followed by the Retail Sales and PPi data on January 19th. The following weekend I had an overflowing inbox.
A month later following the January print of CPi and PPi data, I am now getting revised opinions on the FED terminal rates and all the 2023 projections are being re-written once again. The FED terminal rate of c.5.00% from most opinion has now started to appear as c.5.50%.
Look there is no issue, and, I have no problems whatsoever with terminal rates being updated, I expect that, but these changes in opinion necessitate a complete re-working of all economic projections and acres of the Amazon Rainforest must be under threat once again (I do not give stock tips but get maybe get long lumber). Seriously though the printing business must be in boom territory as the re-biding of these reports can in some cases be spectacular productions.
My point is we are in unchartered territory following the GFC: -
- Years of a “zero-interest rate policy”
- Accommodative Central Banks
- Quantitative Easing (QE)
- Worldwide Global Pandemic
- Supply Chain Issues
- War in Europe
- Changing Central Bank policies.
- Interest rate increases
- Quantitative Tightening (QT)
The above is not a complete list, buy you get my point.
The backdrop to all of this is uncertainty, the markets do not like uncertainty, and it now appears that investors do not care for it too much either. Redemptions at the bigger funds show this and this may be the reason that the 2023 economic projections keep getting reworked to be valid and relevant to prospective new clients.
From an outsider looking at these financial institutions that keep updating the “Glossy Literature”, relevance could be confused with lack of knowledge, lack of belief or simply just we do not know, and we are best guessing.... you call it.
All I want to say to close this point is get prepared....
Over recent days I have heard of a different way that US data is being collated in 2023 and also that weather was a factor in early 2023, which was never factored into some of the numbers from an analyst perspective. Therefore, do NOT be surprised to see heavy corrections next month and some qualification of the January statistics. The government is never going to qualify blow out numbers, but it will justify weak data and put a SPIN on it.
Next month we could see some reversals...
Does that mean, printers need to be placed on orange alert for the March data releases in case financial institutions begin a rework of their “Glossies” once again?
2. WEEKLY FX PREMIUM PERFORMANCE - FEBRUARY 2023 SO FAR:
Last week, I took some losses last week on part of my USD/JPY short position. I was starting to feel uncomfortable with price moves and it was in breach of mt TRADE PLAN guidelines.
For more information on me and how I trade via THE WEEKLY FX PREMIUM...
If you visit my website, you will find lots of additional supporting information about the way I trade. The link below should be helpful.
3. THE CLOSE:
Finally, always remember longevity in Forex trading can only be achieved through trading with a good MINDSET, RISK, TRADE and HEAD MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility. Trade with a TRADE PLAN, basically, plan your trades and Trade your Plan.
Be grateful for your wins and count them. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
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BLOG VERSION: #491 FREE NEWSLETTER
DATE: 19th February 2023