Hi, well if ever we needed proof of the stupidity of mankind sometimes then surely this is one of those occasions.
The whole financial world this week has been holding its breath to see whether Messrs Yellen and co from the Federal Reserve, drop the phrase “Patient” from their statement later today.
Its all rather silly don’t you think?
Its 99% certain that the Fed is going to raise interest rates at some point over the next 6 months, the only doubt is whether its going to be June or September.
Interest rate rises lead to stronger currencies, a lot of the recent $USA strength has occurred because of the impending increase and yet this week the markets have gone nowhere in particular whilst journalists and analysts wait to speed read todays report & hang on every word at the following press conference.
I am calculating they will drop the phrase BUT then muddy the waters by saying something like “going forwards decisions will be determined by data not sentiment or phraseology”. The likely reaction in the markets? Your guess is as good as mine. Mine for what its worth is that the $USA is likely to swing wildy in both directions. Dodgy brokers will have a field day. Taking out stops of those who have opted to long and short along the way
So where does it leave us as traders? Option
A) Have a go before todays news, BUT you will be gambling not trading.
Option B) Make a Plan for the various scenarios AFTER the event. Let the dust settle first. Personally I will wait until after London opens on Thursday morning before doing anything.
Also be aware that today is budget day in the UK. There is an election in early May and the markets are nervous that the incumbent government will use this opportunity to bribe the electorate by giving away more than it can afford. If they dont then the Gbp could soar back above $1.50 HOWEVER it may then drop right back down again after the Fed news.
If I had the time I would go fishing today and I receommend you do anything but trade. Having no position is still a position and the wise trader waits until the big fish come to him 🙂
Have a great day, enjoy the silliness by all means but avoid the temptation to trade
regards
Marc Walton
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