Post FED Decision Update: Active Price Action

Investors and traders have experienced an increase in market volatility with the financial markets in Asia and the US markets. Leading the barrage of news was the FED's refrained from moving a rate increase which was somehow anticipated by most analyst.

The DOW's high reaching 16933 nearest to our target levels of 17000 have manage to pull back and have decline back down to the current 16674 where it came from. A short trading session for the weak have likewise been part of a relative good follow through and lack of volumes to create a continued rally. A similar case transpired with the USD index after making a relatively good price recovery from the 94.85 basis point and managed to pull back lower @94.05 that took a rapid price action after the FED's decision. And this led to a ripple price action effect that lifted the EURO and CABLE to their respective high levels, @1.1460 and @1.5660.

While sentiments of market price action spilled over in Asia with the JPN225 reaching a high @18644 then pulled back lower to its current levels @17840. And to top it off with Brent Oil steady @46.90-47.72 before making a rally @50.34 and with a similar reaction back to the 48.85 levels then pulling back higher to its current price @49.85. Prices will pause within these current levels after a week of price swings in both directions. as it moves forward to the closing of the 3rd quarter 2015.

With that said, prior to FED's decision, the market was poised to find itself walking to a volatile market place where our technical trade setups came through with flying colors for our constituents. As we previously called on our video support "Not Just forex: Price Action Analysis & Market Behavior Based on Correlation". Checkout the link. As these will lead towards the end of the quarter and a probable price recovery on the last quarter of the year. 

https://youtu.be/opXzWP5M1eQ

End of 1st Quarter Review: DOW & USD

Dark Clouds Over Market & Investors 

The disappointing jobs data have dented the market’s ability to continue its upward trajectory. As a tentative weakness on the economy’s growth have fueled uncertainty on the FED’s timing increasing rates. Although, the eventuality of pursuing rate increase still remains intact only to be perceive as to when the appropriate time would be made. 

The opening month of January 2015 reflected the correction on the Dow which led a continuing rally for February. While March shows a similar price pattern for consolidation.

The roller coaster ride in the stock market’s direction reflects the presence of volatility that exists in the market. While investors have taken some initiatives to unwind positions at the end of the quarter’s trading activities especially under these uncertain circumstances coming out from the recent reports. 

Correlating the Jobs data with the strength of the USD and lower Oil prices added to the negative tone as lower activity was focused on the affected manufacturing and retail leisure hiring with weather related reasons for the slower growth in new employment as a major factor. 

       End of 1st Quarter Review

CCY Corner - AUD EURGBP Cross

After a series of European banks addressing monetary policy, Denmark and the Reserve
bank of Australia have joined the band wagon on slashing rates to its current
level @2.25%. This move is more for banks to meet a balancing act among the
rest of its peers worldwide. No one has really admitted a currency war but the
fact is that it does exist and makes its presence known particularly in the
financial markets.  

Even with market conditions such as this; having to pay banks for keeping European
deposits especially with interest rates at negative territory is not as
encouraging as it used to be for main street investors. The Aussie carry trades
has changed it tone while it is still beneficial to trade contrary to the Yen has
not been as lucrative like before. A substantial trade amount of volume would
be likened, except that the trading ranges have likewise been narrowing for
quite sometime now. 

CCY Corner - AUD

Insight: Behind CB Rate Decisions

The newly installed US Fed Chairwoman of the Federal Reserve Janet Yellen, have stamped her marked on the market by mentioning the Fed's guidance on its decision of rate increases within 6 months. And moving forward within 2015 after delivering her statements on the FOMC meeting that prompted a strong rally for the US DOLLAR

A different stance was likewise stated by the Bank of Canada governor Stephen Poloz, not to rule out the possibility of a rate cute, have driven the Loonie lower after maintaining its higher price level as compared to where the USD was trading before the FOMC statement. While the previous weeks, the BOE have emphasized a rate increase that also supported the British Pound to its higher levels before the meeting after the same move was made when the Reserve Bank of New Zealand also raised rates.

Insight: Behind CB Rate Decisions

How significant is an 'Interest Rate & Currency Swap' for a forex investor?

More important aspect for an investor or a company that is dealing in financial instruments is the significance of the interest and currency swaps affecting cash flow and assest management in the overall portfolio. This maybe considered to be in an institutional level but can be applied to main-street investors. A better understanding can only assist other investor-traders the relevance of including 'Swaps into the equation' whenever dealing with foreign currency trading.

More often swaps may have been over-looked at times or even neglected, since most FX trades nowadays specially from retail or main-street investors have only been taking speculative trades. Instead of enhancing investment funds with dynamic strategies that effectively improve cash flow and asset protection in the portfolio. Trader-investors loose their grip and are not properly guided that these applications do exist.

Interest Rate & Currency Swaps