FED, Central Banks and Market Movements

The Fed’s statements and interest rate releases occur at 2 PM EST. At 2 pm EST, the Fed operates on USD exchange rate time from 12;30. At 2 pm, exchange rates traded 1 1/2 hours.

Normally at 12:30, nothing exists to trade due to the broad time span to the RBNZ and RBA Fix times but also because the best pips for profit already traded around 12:30. At 2 pm, the Fed essentially operates on its own time and is in command of its own exchange rates. This statement is true to a certain point but most vital is 12:30.

The Fed tried 12:30 announcements but resorted to 2 pm again when volatility hit markets.

EUR/USD lifted from 1.0358 and traded to 1.0454. Our 24 hour bottom factored Tuesday was 1.0374. To know where 1.0358 was located required a 12:30 factor to find 1.0359 and EUR/USD deeply oversold.

But EUR/USD from the hourly charts opened at 1.0401. A trade long or short for the Fed trade was impossible to touch at 1.0401 particularly when 1.0401 was a neutral price.

EUR/USD 1.0454 contained highs at 1.0439, 1.0484 and 1.0506. The only evidence to shorts and target at 1.0454 was the break higher at 1.0439. Without 1.0439, no correct short entry was known.

The Fed raised 50 points. How does 50 points stack up against movements. EUR/USD traded 80 pips, DXY 91, GBP/USD 103, AUD/USD 88, NZD/USD 76, USD/CAD 79 pips. SPX 113, XAU/USD 33 points.

Traded for the Fed to include cross pairs was 1/2 to total daily ranges. After the 2 pm release, another set of circumstances existed to trade the remaining 1/2. GBP/USD for example traded 103 Fed pips but traded 215 overall pips, EUR/USD traded 80 Fed pips inside an overall 149 pip day.

EUR/NZD was our best trades yesterday as the Fed offered 90 pips but the day traded 294 pips. And the trade and profits were as close to perfect as perfect factors to capture most of 294 pips.

The trade evidence for the Fed only trade fails to stack up against movements. A Fed or central bank trade must be viewed as an off sync news announcement. We’ve seen plenty of 80, 150 and 200 pip days without a central bank announcement. I termed the Fed release hype to garner views. We can add another controversial word, propaganda.

Our weekly, daily, 24 hour and long term trades achieve destinations with and without central bank meetings. The Fed and central banks are meaningless. What matters only is a market price and MA and both are separate from central bank words and actions.

Market movements radically changed since 2016 and will completely change again when ESG garners more momentum. Now in its last stages, ESG proposes to change emission and electricity standards, supply chains and accounting standards. All major global companies are on board by force to adoption of the new methods. Jamie Diamond’s comment to hurricane coming is perfectly on track.

Brian Twomey