*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

+EUR, +CHF, +GBP,
-CAD, -JPY
mildly +AUD, +NZD, -USD

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Today’s Trades 06.09.2017- EUR, JPY

Swing

*Good morning/afternoon everyone!*

Hope you all got some sleep because it was a very exciting night in the FX market. GBP dropped as low as 1.2636 but finds itself above 1.2750 at the start of the NY trading session. What happened? Prime Minister May’s party did not secure enough seats to maintain a strong majority and its looking like there could be a hung Parliament, leading to speculation of her resignation. Describing last night’s vote as a setback for May is a terrible understatement but GBP is NOT trading near its lows because she has negotiated to stay as PM for the time being. I posted a chart of how GBP/USD traded after the 2010 Election where there was also a hung Parliament and we can certainly see some parallels. GBP/USD recovered for 2 days before melting lower after a coalition government was formed. I would be careful of selling GBP/USD today as whatever move the pair has should continue on Monday but its a weekend so a deal could be announced so better to wait until Sunday open.

The euro remain under pressure after the ECB meeting and appears to be aiming for 1.1150. USD/JPY continues to rebound as yields rise but there’s a lot of resistance between 110.35 and 110.50. Commodity currencies ex CAD should be quiet as the upward momentum subsides

We have CAD labor data at 8:30 NY / 12:30 GMT. If its weak we should see 1.36

*The MAIN THEMES I see today are*

GBP volatility
EUR weakness
USDJPY resistance
USDCHF strength

watch CAD after data

*Trading Biases*
These will change after US data

-EUR, -CHF
-USDJPY
neutral AUD, NZD

slightly bearish GBP
CAD -- have to see data

*Today’s Potential Ideas*

I like

Sell USDJPY at market (now 110.37), with a stop at 110.62, Target 110.07 (tightened stop -- it either fails here or doesnt)
Sell EURUSD at market at 1.1175, stop at 1.1225, Target 1.1145

FOMC Voters 2014 Dove Hawk Scale

Fed Rate Cut Federal Reserve FOMC FOMC Dove Hawk Scale fomc yellen forex blog Kathy Lien

The Federal Reserve’s Open Market Committee changes every year and 2014 in particular iss a big year for the Federal Reserve because there are a number of new faces on the Federal Open Market Committee or FOMC. With her official confirmation on Monday, Janet Yellen will become the first woman to lead the world’s most influential central bank. Having served as the Vice Chair of the Federal Reserve since 2010, she is not new to the FOMC but her voice will be heard much louder this year in the highly anticipated quarterly post monetary policy meeting press conferences. Yellen is a vocal dove that puts growth ahead of inflation but actions speak louder than words and her vote to taper asset purchases in December suggests that as Fed Chair, she may not be as dovish.

Every year, the makeup of the Federal Open Market Committee also changes with previous voters rotating out and new voters rotating in. This year’s policymakers have the huge responsibility of determining the pace that asset purchases will be tapered and when Quantitative Easing will end.

Two major doves favoring easier versus tighter monetary policy (Evans and Rosengren), one moderate hawk who favors tighter policy (George) and one centrist (Bullard) will be rotating out of voting positions. They will be replaced by Plosser and Fisher, two major hawks, Pianalto a moderate dove and Kocherlakota, who shares a similar bias as Yellen.

Former Bank of Israel Governor Stanley Fischer has also been nominated to replace Yellen as Vice Chair and if confirmed, another hawk would be added to the roster.

There will also be 2 vacancies this year – Elizabeth Duke’s seat (she retired in summer of 2013) and Sarah Raskin’s slot once she moves over to the Treasury. Jerome Powell’s term ends January 31st but President Obama is considering a reappointment. This would leave the central bank more hawkish and willing to follow Bernanke’s proposal for reducing asset purchases by $10 billion at every meeting this year.

Click on image to zoom

2014 FOMC Voters

Openly Dovish

New Fed Chair Janet Yellen
Fed Board Member Daniel Tarullo
NY Fed President William Dudley

Minneapolis Fed President Kocherlakota

Moderately Dovish

Cleveland Fed President Pianalto
Fed Board Jerome Powell* (term ends Jan 31 but possible reappointment)

Moderately Hawkish


Fed Board Member Jeremy Stein
Vice Chair Stanley Fischer** (waiting confirmation)

Hawkish


Philadelphia Fed President Charles Plosser
Dallas Fed President Richard Fisher

2 Vacant Slots

Leaving 2014

Fed Chairman Ben Bernanke
(dove)
Kansas City Fed President Esther George (moderate hawk)
St. Louis Fed President Bullard (centrist)
Boston Fed President Eric Rosengren (dove)
Chicago Fed President Charles Evans (dove)

Potential Replacements for Vacant Slots

Lael Brainard, the former Treasury undersecretary is a possible candidate to replace Sarah Raskin’s seat on the Federal Reserve Board of Governors. She stepped down from the Treasury in November and has been known to play a major role in negotiations with China and Europe during the sovereign debt crisis. Brainard is a strong negotiator who pressured European leaders for a more aggressive response to the debt crisis. Thomas Hoenig’s name has been floated around as a possible replacement for Duke. Hoenig is a former Kansas Federal Reserve President who was a vocal hawk during his time at the central bank. Finally Jeremy Stein is expected to step down from the Fed and return to teaching at Harvard in May, which means that he could leave another seat vacant. The Obama Administration will be eager to fill these slots quickly and bring the FOMC back to full capacity.