Good Day Traders,

With the Fed meeting out of the way, the markets appear to have a fairly clear path moving forward. Despite much chatter about a looming recession, there is not really any evidence to suggest that one will unfold within the year. The most recent Bloomberg and CitiGroup Economic Surprise Index shows that economic growth is rebounding.

US

Some other macro and quantitative data points are worth highlighting in terms of the growth outlook

Lowering of the Chinese Reserve Requirement - historically bullish for the S&P 500 2-3 months out

Value stocks outpacing Growth stocks recently - historically bullish for the S&P 500 2-3 months out

Sunday/Monday spike higher in oil prices (+20%) points to lower oil prices moving forward. Bullish for the economy overall.

10-year Treasury yields set to move higher after a massive move lower. Oddly enough, bullish for stocks historically speaking

So you might be asking yourself, “Dave, great data points, but these are more aligned with an equity trader.”

Yes, and no. Bear in mind that as an FX trader, you cannot ignore the other related asset classes and the macro-economic and quantitative backdrop. I have never met a successful FX trader who looks solely at charts or just one analysis technique (technicals, fundamentals, macro, quantitative etc etc). It is the successful synthesis of various techniques and inputs that will provide you a complete picture.

 

So what does that mean for FX?

Weaker Dollar Index (DXY): near-term target of 97.50-96.73

By default that drives EUR/USD higher towards 1.1151-1.1247...

...USD/CHF moves lower towards .9800AUD/USD looks to move higher too - less dependent on DXY - targeting .6922+

Any reviews, news, research, analysis, prices or other information contained in this article is provided as general market commentary, does not constitute investment advice and may undergo changes from time to time. Trading the Financial and Currency Markets on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as to your favor. Before entering trading Financial and Currency Markets, you should carefully consider your investment objectives, level of experience and risk appetite. There is a possibility that you could sustain a loss of some or more of your initial investment and therefore you should not invest money which you cannot afford to lose. You should be aware of all the risks associated with Financial and Currency Markets trading, and in case you have any doubt, rather seek advice from an independent financial advisor. Scandinavian Capital Markets AB, its owners, employees, agents or affiliates do not give investment advice, therefore Scandinavian Capital Markets AB assumes no liability for any loss or damage, including without limitation to, any loss of profit, which may be suffered directly or indirectly from use of or reliance on such information. Scandinavian Capital Markets AB strongly encourages consultation with a licensed representative or financial advisor regarding any particular investment or use of any investment strategy.

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