{"id":142439,"date":"2019-02-24T08:27:32","date_gmt":"2019-02-24T13:27:32","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=142439"},"modified":"2019-02-23T16:31:19","modified_gmt":"2019-02-23T21:31:19","slug":"the-week-ahead-february-2019-currency-point-usd-the-fed-of-it","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/02\/the-week-ahead-february-2019-currency-point-usd-the-fed-of-it\/","title":{"rendered":"The Week Ahead: February 2019 \u2013 Currency Point \u2013 USD The Fed of it"},"content":{"rendered":"<div id=\"inves-2720212703\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">February 24, 2019<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><section id=\"content\" class=\"post-single\">\n<div class=\"container\">\n<div class=\"post-item\">\n<p><strong>By <\/strong><a href=\"https:\/\/www.fpmarkets.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>FPMarkets.com<\/strong><\/a><\/p>\n<p><iframe loading=\"lazy\" id=\"_dytid_8060\" src=\"https:\/\/www.youtube.com\/embed\/21WafnkXVqg\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Currency Point \u2013 USD The Fed of it<\/strong><\/p>\n<p>The USD 2018 rally was always unlikely to continue to into 2019. However, the release of the January Fed Minutes suggests that USD\u2019s likely \u2018moderation\u2019 in 2019 may actually turn more bearish move.<\/p>\n<p>The Fed has clearly been spooked by the market, the movements in the bond market in particular has moved the dial. Then there are the \u2018risks\u2019 in the US economy which are pointing to slowing growth. All this is has seen the Board move almost 180 in its views on the Fed Funds rate and its view on GDP.<\/p>\n<p>However, what has become clear from a currency perspective is possible actions that this 180 might cause the Fed to do 2019.<\/p>\n<p><a href=\"http:\/\/go.fpmarkets.com\/visit\/?bta=35137&amp;nci=5462\" target=\"_Top\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/fpmarkets.ck-cdn.com\/tn\/serve\/?cid=361646\" width=\"728\" height=\"90\" border=\"0\" \/><\/a><\/p>\n<p>Here are the four key points from the January FOMC meeting that are USD sensitive:<\/p><div id=\"inves-82697445\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<ol>\n<li>Most member stated growth as \u2018solid\u2019 down from the \u2018strong\u2019 and expect growth to \u201cstep down somewhat\u201d due to: softer sentiment, a weaker global outlook, and \u2018materially tighter financial conditions\u2019. This final point has been a clear trigger for the market to starting to discount rises in the Federal Funds rate.<\/li>\n<li>Inflation \u2018remained near 2 percent\u2019 however the Minutes note members discussed recent \u201csoftness\u201d in inflation is now persisting, and the \u2018hoped\u2019 upward inflation is not \u2018more muted\u2019. The Minutes also note that market-based measures of inflation had lowered in recent months, yet survey-based measures of inflation expectations were \u2018little changed\u2019. This is the Fed mandate that has realistically never been meet and again feeds into why the Federal Funds rate is likely to remain on hold for 2019.<\/li>\n<li>Most members agreed with replacing its hiking bias communication with a \u2018patient and flexible approach\u2019. Again, the reasoning: tighter financial conditions, softer inflation, slower foreign growth, and trade policy uncertainty as justifying a patient approach to policy. But what did differ was the adjustment to the Federal Funds rate in the back end of the year \u2018several\u2019 members stated increases were necessary \u2018only if\u2019 inflation was higher than in their \u2018baseline\u2019 (aka 2%) while \u2018several\u2019 others indicated that hikes would be appropriate if the economy evolved as they expected. Suggesting that we now have a split on the board around rate rises. The baseline however is rates are on hold with a slight hike bias \u2013 a mild USD positive.<\/li>\n<li>The balance sheet: this was the most interesting part of the statement, almost all Board members thought it would be necessary to announce that the FOMC will stop reducing the Fed\u2019s balance sheet sometime in the back-end of this year. The balance sheet topped out at US$4.5 trillion its likely to be US$4 trillion in size come June. This is substantially bigger than forecast and \u2018enormous\u2019 when compared to the balance sheet pre \u2013 GFC. The suggestion from members was that Quantitative Tightening (QT) might be influencing financial markets, and thus policy needs to be \u2018flexible in principle\u2019. The end of QT at a much higher level than forecasted suggests market \u2018support\u2019 is not out of the question \u2013 USD dampener.<\/li>\n<\/ol>\n<p>Based on all of this, one would expect the Fed to announce these \u2018changes\u2019 to policy in the upcoming March meeting. This would put a weight into USD G10 pairs \u2013 pencil this event into the diary now.<\/p>\n<p><strong>By <\/strong><a href=\"https:\/\/www.fpmarkets.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>FPMarkets.com<\/strong><\/a><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>By FPMarkets.com &nbsp; Currency Point \u2013 USD The Fed of it The USD 2018 rally was always unlikely to continue to into 2019. However, the release of the January Fed Minutes suggests that USD\u2019s likely \u2018moderation\u2019 in 2019 may actually turn more bearish move. The Fed has clearly been spooked by the market, the movements [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-142439","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=142439"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142439\/revisions"}],"predecessor-version":[{"id":142440,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/142439\/revisions\/142440"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=142439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=142439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=142439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}