While the market is digesting the February NFP figures, discussions on FOMC meeting is getting more and more intense; to hike or not to hike. Talking of logic, a sound economist should expect no April Fed rate hike next week and these are the reasons.
There is a new sheriff in the town, and it is no longer a surprise. Trump is by far the most unpredictable president in the U.S. presidential history and he is in charge now. According to the best practices, there should not be any monetary policy change until the new administration’s monetary/budgetary plan is revealed. Trump administration has not announced/finalized their complete federal budgetary plan yet. Hence, since the Fed does not have the big picture ahead of them, I would expect no April Fed rate hike next week.
USD Index support no April Fed rate hike
I know technical analysis is not the most relevant info to refer to while talking of fundamental developments. However, looking into the US dollar index, one with clear mind can see that the USD is under pressure. Especially, the weekly price action development demonstrate the big picture more clearly. I’ve covered this topic before many times, and if you have not read about my Sword Candle theory, maybe you should watch this candlestick analysis video again.
As per the above U.S. dollar index chart we can see that the weekly candle is forming, what we call a sword candle. Such, sword candle is an indication for a market correction/reversal. Combining this candle with the price action we can see that the U.S. Dollar is likely to bounce from its current levels. Hence, U.S. dollar index also suggests no April Fed Rate hike next week. As it is projecting a weaker U.S. dollar.
Trump vs. Janet Yellen – April Fed Rate hike decision
It is not a secret that the U.S. President Donald Trump and Janet Yellen are not supportive of each other. Indeed, the U.S. president wants to replace Janet Yellen and change the FOMC committee members. Nonetheless, the conflict between Donad Trump and Janet Yellen could be the breaking point for the April Fed Rate Hike decision.
The winner nonetheless according to this uncertainty is likely to be the Cryptocurrencies (See Top 10 Cryptocurrencies in 2017) and Gold. Despite its most recent bearish run, Gold is showing signs of recovery supported by Trump’s comments.
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