Fed Today, but Keep Your Eye on July 3rd …
Posted on Wednesday, June 25th, 2008 | In Current Market NewsToday is the big day. In a few hours everyone will be tuning in for a first-hand report on the latest Federal Open Market Committee rate decision. All the FOMC meetings seem increasingly important, but it’s those similar to today’s meeting, where officials could POTENTIALLY change policy direction, that really get the market riled up.
The last three FOMC decisions, albeit all decisions to cut rates, actually sent the dollar rallying in the trading sessions that followed. And even though a rate hike today is unlikely, this meeting has the potential to send the dollar rallying again.
It seems that the dollar could only suffer in the wake of today’s meeting, and the several days that follow, if the FOMC statement severely disappoints. (Keep in mind the market has built up its expectations for hawkishness.)
But when all the dust has settled, we think the difference maker is going to be the European Central Bank. The dollar will likely bounce all over the place when the FOMC decision is released today, but not until the ECB’s next rate decision (July 3rd) will the dollar be able to stick to a longer-term direction.
We grabbed the following chart from the European Central Bank website just to give you an idea what they’re dealing with …
Economic concerns continue to be to the downside for Europe. And the ECB President, Jean-Claude Trichet, continues to reiterate that fact. But in recent comments he also reiterated the ECB’s commitment to stabilizing prices.
Let’s just say this chart, which shows prices well above their average and well above ECB comfort levels, can’t possibly leave a good feeling in Trichet’s stomach.
We’re leaning more towards a dollar-positive outcome this afternoon than dollar-negative. But even if we’re right, there’s still plenty of time for fortune’s to reverse. The big money rides on the ECB.
Regards,
Jack & JR
Last 5 posts by Jack Crooks
- Only Gold Is Winning the Ugly Contest - February 26th, 2009
- Stocks AND Dollar to Rally in the First Half? Keep Hope Alive - January 6th, 2009
- We’re Bullish on the US Dollar Today ... and Tomorrow! - January 5th, 2009
- Can we rest? Gold may lead the way. - December 22nd, 2008
- A super deal on the U.S. dollar - December 20th, 2008
 About Jack Crooks (http://blogs.moneyandmarkets.com/blog/currency-corner)
John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research’s latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007. Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis. Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron’s, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC. Mr. Crooks holds a bachelor’s degree in finance from Florida State University and a master’s in business administration from the University of North Texas. |
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