Buying into Federal Reserve rate statement on Wednesday
The Federal Reserve is meeting on Wednesday and the current expectations are for two rate hikes before the end of this year. The chances of a rate hike this meeting are seen as 92%. The chance of a December rate hike are seen as being just under 80%. The current forecast for next year is three hikes in 2019. Check out Adam’s piece here on the clue that the inclusion of the word ‘accommodative’ will give if it is included in the rate statement. See here.
The fly in the ointment will be the US China trade war and the unknown impact that will have, as no-one knows how this is going to work it’s way through. My long view is that China will not antagonises the US and find a way to make a deal with the US, but there may be a lot of volatility until we get there, so that’s not much good for our day to day trading. Justin summed the current situation up well when he described it as being at the ‘finger pointing stage’. see here.
In the lead up to Wednesday I am looking to buy USD/JPY on the dips on the 1 hr chart on anticipation of the USD being bid into the rate hike expectation.. I am looking at entering on the 100 MA with stops below the 200 MA on the 1hr chart below.