Fed raises 2018 outlook for US economy

The Federal Reserve hiked the Fed funds target rate by 25 bp as universally expected, and signaled two hikes are likely to be appropriate in the second quarter.  It was very close call in March, and here in June, one policymaker went from one hike to two.  That is the source of the change. As Chair Powell indicated, most forecasts were unchanged since March.
The FOMC is still looking at a terminal rate of 3.375% in 2020. The path has been tweaked slightly in today’s Summary of Economic Projections.
The Fed upgraded its economic assessment, though it still sees the 4.5% as full employment. The rate currently stands at 3.8%.  This appears to be a hawkish sign, suggesting that the Fed funds rate may have to go above neutral at some point.  The FOMC statement is evolving in this direction.  The assessment that rates would remain below long-run levels “for some time” was taken out of the statement.  Still, the Fed describes its current stance as accommodative.  The median forecast sees the Fed funds above the long-term average in both 2019 and 2020.
  • Economic activity has been rising at a “solid” rate, the Fed’s statement said, marking an upgrade from “moderate” in the previous statement.
  • The median real GDP forecast rose to 2.8 percent, up from 2.7 percent, for this year.
  • Policymakers also lowered their expectations for the unemployment rate. Read More @ https://www.cnbc.com/2018/06/13/fed-raises-2018-outlook-for-us-economy.html

As Fed jacks up rates, bond market warns of potential for economic weakness

  • The Fed raised interest rates as expected by a quarter point so that its fed funds target range is now 1.75 to 2 percent.
  • But more importantly, the Fed raised its forecast to include a fourth rate hike for this year, ending the debate on a divided Wall Street about whether it would raise interest rates three or four times this year.
  • Treasury yields rose but the yield curve flattened to its lowest level since September 2007 after the Fed announcement, signaling fears of future economic weakness. Read More @ https://www.cnbc.com/2018/06/13/as-fed-jacks-up-rates-bond-market-warns-of-potential-for-economic-weakness.html

IN REGARDS TO TRADE – Alan Greenspan on trade: The notion that foreigners are ripping us off is ‘nonsense’

Former Federal Reserve Chairman Alan Greenspan sharply disputed the notion the U.S. was being ripped off by other countries because of its trade deficit. The former central bank chief told CNBC that President Donald Trump has the situation “reversed” as it pertains to global trade issues. Asked if he thought the country was in a trade war, Greenspan told CNBC’s Sara Eisen that “we’re on the edge. I think we should be very sad if we do, because the presumption is that foreigners are ripping us off. It’s nonsense.” However, the man nicknamed “The Maestro” for the way he handled central banking policy said he does not think the tit-for-tat tariffs between the U.S. and its trading partners will put much of a dent in an economy that appears to be running at a 3 percent or more growth rate. In fact, he expressed support for some of what Trump is doing regarding fiscal policy. Read More @ https://www.cnbc.com/2018/06/13/alan-greenspan-on-trade-the-notion-that-foreigners-are-ripping-us-off-is-nonsense.html

WHAT IS THE USD INDEX SAYING?

USD takes a breather after a huge move this morning; pullback for profit taking have already started – the price will go to $93 before the next upward movement. Overall the USD will go higher but in a moderate movement.

TODAYS NEWS THAT MIGHT AFFECT YOUR TECHNICAL TRADES TODAY.

  1. 9.00am – AUD will go to action with Inflation expectations – expected to be good.
  2. 9.30am – Australia will release their employment rate and is expected to be weak – but we think otherwise. We BUY AUD.
  3. 10.00m – China will release Fixed Assets Investment, Industrial Production and Retails sales – expected to be little or no change.
  4. 2.00pm – Germany & France will release CPI which is going to create good volatility – no change is expected however if there is any change from expectation the euro will react.
  5. 4.30pm – UK data have been weak the last 2 week surprisingly – UK will release Retail sales and is expected to be weak.
  6. 8.30pm – ECB goes to action – EURO is widely expected to gain. Hawkish statement is expected from ECB.
  7. 8.30pm – US will also release their data retail sales and employment claims. Little or no movement.
  8. 10.00pm – US will release their Business Inventories – expected to be good.

Overall USD will dominate the market this year; however ECB also have a wild card together with Japan with their QE & Loose monetary policies. The moment they tighten their monetary policies there will be huge impact between US – EURO & JPY. The market stays fragile even though USD looks like the blue eye boy!! – BE CAUTIOUS AND ALWAYS HAEV GOOD MONEY MANAGEMENT IN PLACE.

High Risk Investment Warning:

Please note that Forex and other leveraged trading involves significant risk of loss, It is not suitable for all traders and you should make sure you understand the risks involved, it is recommended that you seek an independent advice, if necessary.

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