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Janet did it! Print
Written by Site admin   
Thursday, 15 December 2016 14:34

Christmas has come early this year, at least for Forex traders. We had the Trump rally in stock markets and the US$ and then Janet followed through with her promise of the quarter point increase that everyone expected, and the Dollar has taken off again.

What was unexpected though was the even more upbeat tone of her statement from previous ones and responses to questions:

"With a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished. So I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment."

This optimism translates into expectations of a series of more quarter point increases in 2017 and that has kicked the dollar up and sent the Euro back into it's long term downtrend.

All this is great for Forex traders but the stock market is sidelined and not so ecstatic - so far.

The 4 hour chart shows this uncertainty of whether Janet's statement is bullish or bearish for stocks. On the one hand, the stock market loves a growing economy with low interest rates, and the stimulus of QE even more. But the Fed statement was notably light on any suggestion of 'fiscal stimulus' with this comment; "stock valuations are in normal ranges". Maybe we should keep a close eye on how stock markets perform over the last days of 2016.

 

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