For me the fallout from the BOJ negative interest rate policy announcement, which starts next week, dominated the price action.

Add this to oil price volatility and Stanley Fischer (Vice-Chairman FED) comments about U.S. interest rate hikes and it gave us an eventful week. Basically, the USD was taken to the woodshed and given a handsome spanking.

From what I could see on my twitter feed nobody appeared to lose any money, obviously everyone except myself knew what oil and Fischer was going to do and say. Happy days once again if you trade currencies, its just amazing day after day that nobody admits to having a poor run of trades or loss of cash.

Last week, I banked a few pips and $$$, but I gave back more than I stashed away, very annoying and frustrating.

Then last Friday we had U.S. NFP (Non-Farm Payrolls); the headline number was weaker than expected at 151,000. However, the unemployment rate was at 4.9%, the first time below 5% since February 2008. The average hourly earnings increased, as did the labour force participation rate. If earnings increase this is seen as an inflation indicator, even if it rises by one penny!

In my opinion what follows NFP is now no better than a gambling session at times. It is just a chop fest and it is fast becoming a mugs game after NFP.




I am quite astonished this week reading through the selection of reports and opinions from institutions and analysts that cross my desk, plus the ones I seek out with regards to comments about the FED, its policies and implementations.

I know that we live in an instant gratification world, however, the scrutiny of every word, comma placement and reference takes on a rather compulsive obsessive behavioral agenda, where it appears to me more than ever the FED are in a no win situation. They are damned if they do and damned if they don’t!

There is so much scrutiny and commentary that any market move, weak economic data release that is contrary to prior content in a FED statement renders that particular FED statement invalid by the markets and analysts. I know that this is nothing really new but it is now treated as dead in the water.

What do I mean?

Over the past two weeks, we have heard from the BOJ, RBNZ, RBA, BOE and the FED.

As Forex traders central bank policy is probably the biggest influence on currency prices and we have to take note of policy updates, changes and the verbal comments made to try and obtain an edge in knowing what the various central bank governors are thinking. I think we all get that, however, the amount of commentary about the FED won’t do this and the Fed can’t do that commentary only about 30 days since changing the direction of the world’s largest economy is staggering.

Most of this commentary I believe the FED can fix themselves and eradicate the uncertainty that this scrutiny brings upon the markets which ultimately manifests as FEAR and GREED (see later).

In my opinion, a lot of the problems sit at the door of the news frenzied media, which gives non-accountable bloody idiots airtime to discuss issues that are way beyond their pay grade. They tell us what the FED is thinking and doing almost on an hourly basis. This is ludicrous and quite frankly irresponsible by the media to encourage this propaganda that only fuels uncertainty and instability, which are core responsibilities of a central bank. Long gone are the days that news organizations reported on news, they are now pre-occupied with creating news.

The FED is probably the most powerful institution in the world. I have written in the past about how the media has elevated bank governors / presidents to “Rock Star” status.

However, before moving forward, let’s “Take a step back” as Jim Kerr of Simple Minds would sing and look at “Where are we now”, as David Bowie sang, with regards to the central banks?

ECB: – Basically, we have heard from Mario Draghi, re-iterating that price stability and inflation are probably the two main drivers that influence his policies. The EUROZONE has real issues, economies running little better than DEFLATION and a collection of leaders and bankers who have yet to unite on anything. Mario Draghi has promised that he will use 100% of his mandate to deliver 2% inflation to the EUROZONE. He has recently extended QE (Quantitative Easing) and he has applied negative interest rates to ECB deposits in an attempt to force the banking sector to lend and stimulate growth in support of his macro policies.

To coin a phrase he is DOVISH.

BOJ: – Not wanting to be outdone, we should also note that Japan through the BOJ governor Haruhiko Kuroda has also made very similar comments to Mario Draghi. “Whatever” and “as long as it takes” are his key giveaways with regards to the BOJ and the QQE (Quantitative and Qualitative Easing) program they have in situ. Like most central banks targets for inflation are pushed out to buy more time. The BOJ has been doing this since the mid 1990’s. The BOJ has been dealing with DEFLATION for decades and whilst numerous failed attempts have resulted in ritual suicides and God only knows what else, Kuroda has the dosh to throw at this problem. Whether he succeeds or not is another kettle of fish, so to speak, but he is saying and doing all the usual things. Just over a week ago he introduced negative interest rates for banks and large institutions. Whilst this is initially a very modest start at 0.10%, it shows future intent.

To coin a phrase he is DOVISH.

BOE: – Very recently we heard “Farmer” Carney with his JCB announce that the UK growth forecasts for the next three years would be cut. Carney blamed the U.S. economy (If Donald Trump were President he would sue over that remark, he’s sued over less before) and obviously the price of oil. He now sees the UK inflation target of 2% being achieved in 2018.

Carney still maintains that the next interest rate move by the BOE will be up. However, there is great uncertainty in the UK with the BREXIT “will they / wont they” media polls that sporadically appear. What we do know is the EUROZONE has enough of its own issues to deal with and hopes that the UK terms of inclusion would just go away. There is little chance of that and as a huge net contributor to the EUROZONE purse finally it looks like someone is trying to dare I say get some value for money. This must concern Carney and the BOE.

Carney was HAWKISH… now I believe he is NEUTRAL to turning DOVISH if waves of uncertainty sweep across the UK.

RBNZ: – Next we have Graeme Wheeler at the RBNZ. He is ready to act, or so he tells us, and the chances of rate increases in New Zealand this year are pretty much ruled out. Economic data flatters from time to time but the China slowdown effect (New Zealand’s largest trade partner) has not yet hit home. Added to China we have Dairy Prices, which have produced really poor auction results of late and these are bearish for the NZD and the economy moving forward.

Wheeler was NEUTRAL… now he wants to be accommodative but without being called a DOVE. From my perspective he is NEUTRAL turning DOVISH.

RBA: – Glenn Stevens at the RBA is a master juggler. Sydney housing boom, commodity prices plunging and economic data mixed. How do you manage a way forward in that environment? He has left the door open for future accommodation if required. Low inflation is a concern but not enough at the moment to warrant easing.

For now he is NEUTRAL.

SNB: – Then we have Thomas Jordan at the SNB. Negative interest rates already in play at 0.75% and finally the EUR/CHF is above 1.1000. Whilst we all applaud him for the negative interest rate tactic that is being copied the world over, I somehow believe that the EUR/CHF was being supported above 1.0750 by the SNB and probably very quietly some under the counter transactions have taken place to gently push it higher. The EUR/CHF seems unable to retrace like the other CHF pairs of late…interesting… call me cynical, it’s like water off a ducks back, I have been called much worse. Are they (SNB) playing the same games as the other central banks? Yes and no.

Without doubt though Jordan is accommodative and therefore he is DOVISH.

BOC: – Stephen Poloz at the BOC, God love him. He has a new government, which will be looser on the purse strings than the previous, and he has oil prices to contend with. Although oil only accounts for around 10% of the contribution to Canada’s GDP the “loonie” is treated as a proxy for oil pricing. The Canadian economy is “up the Swannee” without a paddle and no matter how much spin is placed on the data, the straight facts are that oil is important to the Canadian economy for jobs and ancillary jobs and production etc so the prolonged price of WTi below $40.00 must be causing pain. To brush this fact off is total bulls**t.

I think that if it was not for the fact that the first budget by Justin Trudeau is coming very soon the BOC would have cut rates. Instead, they hold the powder dry waiting to see if the political stimulus provided through the budget will have the desired effect on the Canadian economy. It is very risky. Bare in mind in the run up to the last BOC Rate Statement, both QE and negative interest rates, were discussed by BOC committee members. This one is not over yet.

Stephen Poloz and the BOC are allegedly NEUTRAL.

FED: – Janet Yellen the FED chair, inherited from her predecessor Ben Bernanke a theater of transparency in which the markets would be advised ahead of every decision that the FED was about to make. Let me be fair; this was a great decision at the time, the world’s finances were in a mess, banks were under capitalized and there were very frequent stress tests to ensure that the banks ratios were in line with the FED’s objectives to prevent a further bank catastrophe.
“Helicopter Ben” was out delivery bucket loads of cash like a modern day Santa dropping wedges of crisp notes all over New York and Chicago and a jolly time was had by all. “Do not worry” Ben will save you, Ben will do whatever to ensure price stability, the power of the FED is behind you.

For 6/7 years Wall Street was supported, there were no surprises no upsets. The U.S. was at rock bottom and the FED telegraphed it’s every move to ensure that there were no uncertainties and no surprises.

Poor, Janet Yellen worked through this 100% support time with Bernanke, but now she has to move the FED into the next period, being normal again. It is challenging and it’s never been done before coming out of ultra supportive QE policies into normality once again.

To make it more difficult she has to contend with the feckin’ dots. Holy Mother of God, talk about Turkey’s voting for Christmas… get rid of the feckin’ dots they are a noose around your head… way too rigid and these dots, in my opinion, create nothing but problems to manage.

(The dots are graph based opinion provided by FOMC voting members who commit to placing dots when they think the next rate increase or decrease should take place…amongst other things as well).

Analysts on Wall Street change their minds, as often as the wind changes direction and they are NOT accountable. They pop into the studios of CNBC and BLOOMBERG, spout a few comments to create news, they can be 360 degrees away from their last opinion which could have been only days previous and the anchors on TV are not bright enough to pick up on this, nor do they want to pick up on this if it sells advertising and rewards poor behavior by inviting them back time after time. They feed us sht and we act like farmer’s fields – we love sht… give us more. This creates uncertainty and only feeds a TV stations and analysts 15 minutes of fame by being as outspoken and at times as ridiculous as possible.

The current communication framework to the media is counter-productive to the FED. It’s too much information. The press conferences can deliver the written work, if required.

Let me elaborate.

Back to those dots, the FOMC members have the dots published and they are held accountable for weeks, if not months following. It may have been originally designed as showing insight and flexibility to market change by the FED but as far as the media is concerned the dots may as well have come down in tablets of stone off Mount Sinai delivered by Moses himself. They have to go.

As mentioned before, the FED has shifted / changed direction with policy. This is a huge event and should NOT be treated lightly.

Economic data will never be 100% positive all of the time. There will be lapses but the FED is like a 2-mile long oil tanker is takes miles to stop and many miles to turn around. There are far too many cries about no more rate hikes in 2016 the data is too bad. Based off what? One set of data… for God’s sake give me break. We are talking about the biggest economy in the world and a 0.25% rate increase was applied about 30 days ago. This year we should see a number of rate hikes to take the FED funds rate back to 1%. I think that the dot plotting showed 3 or 4 interest rate increases this year, however, because we have had some weak data they are apparently according to some parts of the media and analysts all off. We have just started month 2 of the year and it’s all off… FED policy needs to be re-written.

Lets get a damn grip.

The FED is going to raise rates this year. The calls for zero rate hikes even in the first six months are totally premature and are based off day-to-day reactions. The FED deals long term, very long term, it has to.

It would probably help the FED immensely if no pre-warning was given and no “dot excel sheets” were produced for distribution. The market creates it’s own uncertainty and it becomes the story of “The fish that got away” when all is said and done. The FED has its dots, it just a self-induced production for the markets to beat them over the head with.

I know matters are not helped when individual FOMC members bask in their 15 minutes of glory from time to time like vice-chairman Stanley Fischer did last week. Comments made that make it look like there will be no rate increase in March based on the fact there are U.S. growth concerns on the first half of 2016, not only screw with my open trades, but on a more serious note undermine FED policy.

How times change. Am I now to believe that because the FED is raising rates the U.S. economy is now suddenly a load of she, when only weeks ago U.S. commentators were doing the we’re great, the EUROZONE and the rest of the world is she? Analysts and TV anchors cannot have it all ways they are not demi-Gods.

Whilst it is a data dependent world that we live in, we have to be calm and measured about moving forward. The FED waited a year to hike rates to just 0.25% to start on a path of normality in the U.S. economy.

To simply write off FED interest rate activity for the first 6 months of 2016, is a dangerous thing to do, in my opinion.

You should never under-estimate a central bank and of all the central banks to under-estimate in my opinion only a fool would under-estimate the FED.

Under Janet Yellen’s leadership the Fed has been patient, deliberate, timely and probably too communicative for it’s own good. They have a plan, they talk with other central banks, they know what is coming up and the react, plan and schedule maybe at a snails pace, but that is the nature of the beast… it is what they do and how they do it. One month’s run of poor data will not derail the plan.

The naysayer’s were out in force ahead of NFP with doom and gloom and after the data release they crawled back under the rocks from where they came from.

The underlining economy in the U.S. is stronger and more resilient than most of us appreciate, the FED are experts at what they do.

Most of the time the “Cry babies” as I call them, are investment managers who are unable to cope with a two-way market having spent most of the pasty 5/6 years operating with FED support in a one-sided marketplace.

Finally the FED is HAWKISH.



(There are many more news items related to the Forex Market other than the ones listed below. These are the ones that interest me. You can go to and for a more comprehensive lists of all news events that are Forex related).
SUNDAY: CNY – Trade Balance.



WEDNESDAY: USD – Janet Yellen – Testifies.
WEDNESDAY: USD – Crude Oil Inventories.


FRIDAY: USD – Core and Retail Sales.


(In this section I have as usual kept my charts as minimalist as possible. With regards to charting in my opinion less is more!! I hope that they are clear. All readers regardless of level of experience should be able to follow my thoughts from my comments to the levels on the charts with ease)

My comments are contained on the charts.

EUR/USD – Weekly Closing Price: 1.1156

EURUSD D 06022016



GBP/USD – Weekly Closing Price: 1.4499

GBPUSD D 06022016



AUD/USD – Weekly Closing Price: 0.7062

AUDUSD D 06022016



NZD/USD – Weekly Closing Price: 0.6621

NZDUSD D 06022016



USD/CAD – Weekly Closing Price: 1.3914

USDCAD D 06022016



USD/CHF – Weekly Closing Price: 0.9904

USDCHF D 06022016



USD/JPY – Weekly Closing Price: 116.81

 USDJPY D 06022016



There is not a great deal of high beta economic data scheduled for release this week. I therefore believe that we will be held hostage to a large extent by the equity markets and oil.

The market is extremely fickle at the moment and I want to be sensible with my approach. Whilst I have several live trades and a few limit orders pending I will remain lower key for the short term.

I always remember being told in my early days of trading some of your best trades will be the ones that you did not take. Never a truer set of words spoken. I will always have a daily objective and plan to execute, but now is the time to really let the trades come to you.

The response to NFP last Friday was rather muted and weird. In my opinion, the markets expected an overall failure, which they did not receive. The markets are strange at the best of times. Wall Street expects and believes that the FED will prop matters up at every twist and turn. Personally, I think that they have realized that they have met their match with Janet Yellen. Yellen is calm, mostly predictable and unruffled. Wall Street could learn a thing or two from Janet Yellen.

Whilst Wall Street continues its adjustment to normalization, it looks like the central bank divergence trade will require a little more time to re-assert itself. During this period I will step back a little.

Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.

Take care,

Scott Pickering
The Pip Accumulator

The post NEVER WRITE OFF THE FED appeared first on

Leave a Reply

Your email address will not be published. Required fields are marked *