ON THE RAZORS EDGE you know the markets are out of alignment when the the biggest news that a currency can get fails to make much of any kind of a mark. What I am referring to is the UK inflation figures. I havent really mentioned them in the previous days, although they would normally be a key development on our radar. It is interest rate expectations that have drive the gbp/usd upward for the last 2 years to the tune of 2,400 pips. Basically half of that has been dissolved in the last two months on fears that inflation was easing and the BoE would not be hiking rates sooner than expected. This is the power of interest rate expectations. No report strikes into the heart of the BoEs inflation mandate than the Inflation Reports, particularly CPI. So why would I be so delinquent in bringing up this to your attention? Because this data, no matter what it was, dwarfs in comparison to the rest of the week. Its impact, if any, will be felt over the medium term, rather than in the short term today. A brief survey of the news shows that figures hit estimates spot on (showing a continued slowing in the economy). but ticked up one point in the core figure. But this one tick, which would normally have sparked some reaction, has been muted. We have precious little on the docket for the rest of the day, so I am not forecasting any major moves, nor am I looking to enter any new positions. I have tightened up our aussie stop, so be sure to check that in the data table below. One other interesting development however, is the release of two separate reports; one from the Bank of International Settlements (BIS), the other from the Organization for Economic Co-operation and Development (OECD). Both of them are warning of the excessive risks inherent in all financial markets due to complacency of investors regarding their risks, and the rationale behind that complacency and increase in risk asset prices, Central Bank Stimulus. This is the same chorus we have been singing for some months now. Traders ought to begin their assessments of market value right here. Well see if they do. So we will sit tight once again today, remembering that patience is as important an aspect of profiting as is active trading. The hour for us to trade will come. It is incumbent that we not be frittering away capital in the meantime on all the noise in the market, or be married to counter trend positions that we got in on too early. Have a great day! Happy TRADING! Bill FOREX TRADING SEPTEMBER RESULTS: +2,440.0 pips Floating P/L: approx 650 pips Year-To-Date RESULTS: +7,389 pips
Posted on: Tue, 16 Sep 2014 11:15:15 +0000
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