If you’re a market addict who needs to unwind on the weekend, then let’s just say that Jackson Hole weekend isn’t for you!
While Fed Chair Janet Yellen chose to avoid any discussion around US monetary policy (well, what did we really expect to be honest…), markets were still disappointed. Yellen instead took the time to speak about post-GFC financial reforms, going head to head with Trump’s views on deregulation and the the US Dollar took a hit as a result. Central banking v politicians at it’s finest.
Keep in mind that a December rate hike remains in play, but the Fed policymakers have sounded lukewarm about another hike in 2017. Futures markets are pricing it in at below 50%, so it’s the short USD trade where your monetary policy risk lays if the Fed decides to go the other way.
Moving onto markets and a further look at the EUR/USD bull flag that we had been eyeing off to end the week:
EUR/USD 4 Hourly:
Price really had set up for the Fed’s position over the weekend and boy did the pattern deliver:
EUR/USD 4 Hourly:
Let’s wait and see how price reacts to the swing high resistance level that’s now been broken and if it pulls back to retest it today. This is the make or break level for a bullish continuation to start the week.
