No surprises from Federal Reserve. Mission accomplished!

8 years ago - Published in Finance, Forex

  • No surprises from the Fed statement and how markets reacted to it
  • New Zealand's central bank is still willing to move
  • I stay away from the NZD however
  • UK data shows the economy is fine and we should be glad about itBy Ken Veksler

The Federal Reserve statement last night was pretty much as expected and so too was the market reaction.
The ensuing price action has largely confirmed that punters haven’t been put off too much from their pre-existing biases with regard the Fed rate path and that, as far as I’m concerned is basically a job well done on the part of the central bank. 

It was only ever going to be a placeholder meeting, with necessary nods given to the current environment. By all accounts, mission accomplished and the waters haven’t been stirred to violently as a result.

The Reserve Bank of New Zealand didn’t move last night but certainly gave an indication that it may still do so. The market is currently heavily pricing such action and the Kiwi (NZD) did little to dispel the likelihood.
Mention specifically was made of the inflation situation and the fact that it’s on a slow boil. Hardly a revelation or for that matter a unique situation… But, let’s be honest, I don’t like the Bird and steer clear of it as much as I can, so…

Elsewhere, European data this morning was as they say “fair to middling”, with prints coming largely in line with expectations and in some instances showing modest beats.
The EURUSD however wasn’t really having any of it and is now largely being driven by cross price action rather than any direct interest. 

Similarly UK GDP data earlier was what I’d regard as perfectly fine and befitting the larger macroeconomic picture here. Interestingly though the narrative was quick to jump on the “but it’s still not anywhere near pre-crisis levels” bandwagon. 

I find this quite telling to be honest and speaks volumes of the market’s unreasonable expectations.
The economy in the UK is for the most part ok, not amazing, but certainly ok. The currency is looking for one more trip north of 1.4450/1.45 but from there we settle once again for downside trajectory.

Today still has us looking for US weekly claims and Durable Goods orders, neither likely to be a real market mover.

I retain my bearish bias (and position) in the GBPAUD but have now trimmed the core a little further as we breached 2.02 overnight. The wings are still working and so too is the case in the EURGBP.

As always, helmets on and good luck out there.

Ken Veksler, Director / Accumen Management