Can Fed Even Manage the Hikes?


With USD longs in charge, Wednesday’s day trade setup was about to get the pullback on USD/JPY into the FOMC minutes.

“The USD/JPY chart has consolidated over the last week after a good rally off its bottoms.

The gap bounce we talked about on the @VantageFX Twitter account was nice, and we’ll see if we can get any sort of a further trade out of this one from here.”

The second pullback when this post was published was as low as you can get before the bulls took charge into the minutes release and beyond:

USD/JPY hourly

USD/JPY hourly

The September Fed Minutes reiterated the expectation of the central bank’s policymakers that the economy can in fact handle gradual interest rate rises.

September was actually quite a close call, with a number of members including George (as we heard in Jackson Hole) and Mester dissenting at the meeting in favour of hiking ASAP.

“Among the participants who supported awaiting further evidence of continued progress toward the committee’s objectives, several stated that the decision at this meeting was a close call.”

For this reason, USD should continue to see buyers stepping in on pullbacks. But heading into the December meeting which is looking more and more like a lock, the question as always turns to expectations vs reality. Of course it’s only October and there will no doubt be countless twists and turns in the meantime, but this will be the theme we’ll be focusing on into 2017.

See you on the @VantageFX Twitter account in conjunction with this blog while this week’s Oil and EUR/USD setups continue to play out. Have a great trading day!

This Thursday

CNY Trade Balance

USD Unemployment Claims

GBP BOE Gov Carney Speaks

USD Crude Oil Inventories

This is a guest post originally appeared on Vantage FX. Reposted with permission.

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