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FED Timing the Rate Hike

When it comes to monetary policy among developed economies, FED is the most hawkish central bank and today's FOMC meeting will reinforce that stance. However this hawkishness is already price in and the market is already expecting a rate hike but the timing of the rate hike is what the market focus is right now. A rate hike today is out of cards as the market probability for a NO rate hike is 98%. Even though few months back my assessment was for Jun rate hike following the 2004 template, many t…
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RBNZ The Most Hawkish CB


I know is kind of long time since my last blog post, but the only reason why I've stop blogging was mainly because I was busy and secondly because I don't have any chance to come back in top 10. In today blog post I want to take the time and have a look into recent NZ dollar price movement.
When it comes to the monetary policy RBNZ is the most hawkish Central Bank among developed economies(see Figure 1) and this is certainly reflected in recent price movement after 2 consecutive raise in in
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RBA Leave Rates Unchanged

Indeed RBA leave the interest rates unchanged which are already at historic low point, this is no surprise as that is the reason why they have been talking down the aussie and making a lot of verbal interventions.
Remember that last year RBA's Stevens said that Australia needs AUD/USD closer to an 0.8500 exchange rate. Basically this was an aggressive verbal intervention from RBA governor who said that lower aussie is preferable to rates to help the economy.
The only reason why he wants lower
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Jignesh avatar
Jignesh 4 Feb.

I see your point even more now that I've read your article. I think at the next RBA meeting if the AUD/USD is above 0.9000 they will do whatever they can to talk the currency down. Similar to the Dec meeting. Your article has made me shift the time frame I had in mind, thanks.

Daytrader21 avatar

@Jignesh Clarifying your time frame when speaking about a trade it's always good:), otherwise both of us can be on opposite trade and both of us can make money. At this point I don't know how low it will get (for the long term trade) but I do think that after the next big down leg we may see in the next years aussie going up.

Jignesh avatar
Jignesh 4 Feb.

I was initially thinking we may hit 0.9100 this week which could be an area to watch. Now I'm thinking looking for a short position closer to the next RBA meeting, maybe 3 weeks. But again, it all depends on the price action. I do think a lot of buyers will be coming in at 0.8500 and profit taking - I believe that is the area you are referring to when you say the next big down leg

Daytrader21 avatar

0.8500 is definitely a big psychological level and RBA's governor target as well, but more recently another RBA member has suggested that an even lower exchange rate would be need and closer to 0.8000. But again this is just RBA rhetoric and in today's dynamic world, market policy can change very fast as they have to adjust to current market conditions. I look at it like a puzzle where each day you add another piece and drop out the older one. it's very fascinating game:)

HOANG_MAI_NHI avatar

very good

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Preparing the week ahead


Next week there are very important upcoming economic events as major Central Banks from around the world have scheduled interest rate decisions and upgrade their market policy, and on top of that, Friday we have the NFP figures which after last poor figure has become an important risk event as we know that tapering is "data depending" and any soft number may be perceived as a threat to the reduction of the bond buying programe.
Tuesday we have RBA interest rate decision and market expectati…
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