Ian Reynolds
Higher For Longer
Traders will be poring over the central bank minutes released this week. Tuesday for the RBA and Thursday for the FED.
Tuesday shouldn't be a surprise after Dr Lowe's two days of hell in Parliament. but every word of the FED statement will be fully analysed by the market.
From Jim Bianco on Twitter, @biancoresearch. Thanks Jim.
"Today's forward curve (cyan) is now equal to the year-end Fed's (blue), This is a HUGE move from Feb 2 (green).
A pivot is no longer priced in.
Also, for the first time this cycle, the market is pricing MORE hikes than the Fed."
Currently this hasn't really translated into more of a short covering rally for dollar so it'll be interesting to see if dollar strength comes through or it's just temporarily holding prices up.
Australia In Focus
Phil Lowe was undoubtedly the star of the week for consumers in Australia. Everyone hung on his every word as he fronted Senate Estimates on Wednesday as well as the Economics Committee of the House of Representatives, taking some colleagues along this time.
Wednesday's performance was cringeworthy but Friday's a lot better.
Here's the best stuff from both performances
- No moderation of goods price inflation in Q4 in Australia, unlike rest of the world
- Q4 price of services rising strongly i.e strong demand
- Apparently he and Treasurer, Jim Chalmers don't talk about interest rates
- He regretted the private lunch with traders / market at investment bank, Barrenjoey, when he should have been addressing the nation as part of the usual post monetary policy update process.
- RBA cancelled a second private briefing with the investment bank
Lowe didn't think that the unemployment numbers on 16 Feb were of any particular interest to the rate setting policy, many times reiterating that inflation is much too high and that there will be more hikes in interest rates.
Here's the second grilling
https://www.youtube.com/live/eAvBl8_og-8?feature=share
AUS/USD Dollar Trade Update
The double top coupled with a hefty boot from Dr Lowe pushed the pair lowe(r) being helped by the weak unemployment numbers and a curiously stable dollar.
So far we've gone short at 0.70c and 0.71c with a stop above 0.72c (close above the double top). We got a good spike down to 0.6811 but short covering drove the price up to close above the fib (0.6873) at 0.6879
Disappointing close but it had hit the lower bound of the daily Bollinger Bands so can't complain too much. The hammer pattern on Friday's candlestick should prompt a rally though.
With that in mind, we're looking for a confirmed close below 0.6873 to add to the short position so will leave the stop where it is for the moment.
Economic Indicators This Week
