Quite a week last week! While most traders were away trying to have nice remaining days of summer by the beach, this week kicked off by a major market panic amid low liquidity eventually being labelled as “Black Monday.” It then continued creating news by game-changing economic events and great Forex trading opportunities. As we head into a new month, let’s review the global market economy and point out what could be expected next. Read more about this below in this Platinum Trading Academy blog.
US Preliminary Q2 GDP
After some countries ie China created chaos in the global market, an impressive 3.7% growth in the year’s second Gross Domestic Product (GDP) release brought hope back the dollar and within a week, the ranking on for the dollar in my eyes went from a bear to a “safe haven bull.”
September Rate Hike Back on the Table?
The GDP reading was good right, and jobless claims were down this week as well. But do these make the economy ready for the first rate hike in 9 years?
Many investors have assumed that the recent sell off in markets from Shanghai to New York meant that Janet Yellen and her gang definitely won’t pull the trigger on a rate hike at its Sept. 16-17 meeting. In my view the market sell off has made a September rate hike even more compelling than it was before, because it gives the Fed the opportunity they need to kill the “yellen rumour wheel” once and for all.
Yellen & Draghi not Attending Jackson Hole Summit
Finance ministers from around the world are gather at this very important hole in Jackson , to discuss important global economic issues. This is an annual event and normally leads to some announcements from the heads. It is also an opportunity for economic decision-makers to coordinate their plans for monetary and fiscal policies. It was during this event that former Fed head Bernanke dropped hints about QE2 back in 2010 and gave more details on their taper plans a couple of years ago. ECB head Mario Draghi has previously shared his ideas on boosting liquidity in the euro zone during Jackson Hole meetings as well. Ms. Yellen decided to be a no-show at this party and instead Fed Vice Chairman Stanley Fischer will represent and speak on behalf of herself the forex market participants are counting on him to shed more light on the U.S. central bank’s rate hike time line.
According to this meetings to cut a long story short “The door is still fully open to Fed lift off in September.”
Dont hold me to this lift off but after looking at these past economic results it could be a possibility.
My FUNDAMENTAL views have not altered since my July, and frankly, these will only change should the FED turn dovish at the September meeting.
If the U.S. economy cannot stomach a 0.25% base rate increase after 7 years being at zero GOD HELP AMERICA. The public and the markets will start believing that all the data produced is just as questionable as China’s data.
This week we have a lot of high profile news events so stick to your trading plan.
If you still don’t have a trading plan or would like to know more about incorporating the fundamentals in to your trading please request a call back by one of our traders. Read more at our Platinum Trading Academy Blog.
Have a beautiful trading week
With kind regards
Platinum Trading Team
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