Only yesterday we saw Dudley doing his best to commit to a 2016 rate hike… Then all of the sudden Bullard goes the opposite direction with the FOMC Minutes!
That’s right. As expected, yesterday’s headlines of the Fed threatening to derail the US stock market rally were nothing but noise.
“Ah central bankers. Masters of making nothing sound like something…
Nothing to see here folks, move along now.”
As a trader, you have to learn to take these headline moves for the noise that they are. Time after time, the common sense decision is most often to fade them. This is because if you’re right, then the market re-pricing will give the bigger move. If you’re wrong however, then price will most likely continue to inch slowly against you into your clearly defined risk (stop loss) levels.
Make sure you take a look back at our ‘trading misplaced market expectations‘ blog for further thoughts around this topic.
Turning our attention back to Forex markets and we see the market disappointment we speak about was for the USD bulls. We were watching this GBP/USD level in yesterday’s pre-FOMC blog and low and behold, the spike only got as far as the zone before being slapped back down again.
GBP/USD 1 Hour
Levels are king and any traders who fade the news were happy to take anywhere up to 50 pips from the high at the top of the zone. Well done to those that stood by their levels.
Continuing along the USD theme, we come to another pair at a significant level: USD/JPY.
USD/JPY 4 Hour
Following the bank of Japan communication disaster, price has returned back to the level before their well-publicised disappointment.
The pair’s inability to see a daily close below the level has shown how significant it is going to be, so watch this space with price dancing around it as I write this blog right now. A break is most likely to see things get messy quickly again. The USD/JPY market isn’t exactly renound for its rationality!
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AUD Employment Change
AUD Unemployment Rate
GBP Retail Sales m/m
USD Philly Fed Manufacturing Index
USD Unemployment Claims
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This is a guest post originally appeared on Vantage FX. Reposted with permission.