A rate hike seems factored in so what's the reaction going to be 15 March
I've long been saying in posts and comments that the expected FOMC rate hike today is factored in already having been well broadcast and supported by generally better data.
I always have been taught to expect the unexpected though so I'll believe it when it's rubber stamped by Yellen & Co later.I also have been cynical about the pace of future hikes, a theme that Adam also highlights in his comprehensive preview here.
Last year we were promised US rate hikes and got one, right at the end of the year almost by way of apology. This year we're promised 3 or 4 but is there any certainty to that outcome?
Data may be improving but the global picture is not, at least politically, and the jury is out economically still with the full extent/impact of Trump's policies yet to be a) fully revealed and b) played out.
I've also long been recommending selling USDJPY rallies ( indeed GBPJPY too) , often against the grain on the way up to 118.00, and that strategy has reaped good rewards for a few of you too I hope.
I hear talk in the comments section about USDJPY heading to 118.00 amid big USD demand if today's talk is particularly hawkish but I stand by my long-held view, expressed here that the world is not ready for rate hikes. Witness the UK where talk of hikes has become talk of long-time hold and even cuts again given the soft wages vs higher inflation that I've also been highlighting as does Ryan today in another excellent preview.
So I anticipate Yellen speaking in cautious tones today and disappointing the bulls again. I will look to sell USDJPY if the algos over-egg any rhetoric ( robots always tend to over-exaggerate) but have a small core short still from higher levels to support my more dovish stance. I also still have core short GBPUSD to help protect if I'm wrong and sold again around 1.2250 earlier today as per my post.
Either way I'm not going to waste too much time or energy in second-guessing and will once again advocate you trade you what you see.
There's other factors in play too, such as Dutch election-based risk sentiment and end of year JPY repatriation, which Japanese firms do by end-March. Some has been conducted already though on the rise to 118.00, as I have outlined previously.
And yes, ours is not to reason why, ours is just to sell and buy.
