From the Desk of Ian Culley @IanCulley

Fed Chair Jerome Powell spoke this afternoon after the central bank announced a 25-basis-point rate hike. 

The fed funds futures were all over the place, from pricing in a 25-basis-point increase to a double-hike. They settled in around a single hike, with a slim chance of a pause.

Exhausting!

It’s clear we can expect increased volatility going forward.

But, instead of guessing the Fed’s next step or parsing Powell's words, I’ll rather sit back, wait, and prepare to trade a decisive breakout.

When I think about the latter stages of the hiking cycle or a potential pause, my mind immediately turns to one currency in particular…

The Japanese yen.

Since the Fed began raising rates last spring, the yen has been one of the strongest trending markets. It stands to reason it could experience a significant trend reversal as the Fed changes course.

Luckily, we have a clear level to set our alerts and define risk. 

Check out the chart of yen futures:

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This is the video recording of the March 2023 Mid-month Conference Call.

From the Desk of Ian Culley @IanCulley

Fear runs rampant across financial markets as the US Dollar Index $DXY prints fresh one-month lows.

Wait… what?

I thought the USD was a safe haven.

Perhaps it is. But it appears the gig is up for King Dollar after being the only game in town for almost a year.

So what now, buy stocks?

Sounds good to me.

And I think we can start buying other global currencies too…

Check out the EUR/USD pair:

The euro is swinging back toward our risk level of 1.08 after failing to hold its breakout earlier this year.

It’s pretty straightforward. If and when it reclaims our breakout level, we’re long targeting 1.1450.

Remember, last month, the 1.08 level was our line in the sand. Below there, a USD rally had potential.

On the flip side, if the euro trades above that level, dollar bulls will have a tough time and risk assets will likely enjoy a significant tailwind...

It's the weekly currency edition of What the FICC?

Dollar and rates were big themes last year – rising in tandem – and continue to be as we head into March.

It shouldn't come as a surprise as the next chart reveals the crux of the story…

Check it out!

From the Desk of Ian Culley @IanCulley

What year is it? 

Is it 2023 or 2022? Because it’s starting to feel like last year all over again…

No, Will Smith hasn’t slapped anyone (that I’m aware of). And I’m confident Bennifer 2.0 is going strong (solely based on Superbowl commercials).

But that’s not my concern. Here’s what does have my attention: the dollar and rates. 

These were big themes last year – rising in tandem – and continue to be as we head into March.

It shouldn't come as a surprise as the next chart reveals the crux of the story…

Check out the overlay chart of the US dollar index $DXY and the US 10-year yield $TNX with a rolling 126-day correlation in the lower pane:

Notice the consistent positive correlation between the US benchmark rate and the dollar since fall 2021. It all began as Federal Reserve officials swept...

This is the video recording of our March 6th Monthly Charts Live Strategy Session

She was always the one.

All along it was the US dollar that was the best indicator.

Old reliable.

So why should we abandon it now?

Look at the US Dollar Index overlaid with the short ETF for the S&P500.

In other words, when the blue line goes up, that means stock market shorts are making money (along with rising dollars). But when the blue line falls, that means the shorts are losing and people who own stocks are the ones making money (with dollars falling):

It's the weekly currency edition of What the FICC?

Instead of allowing the market to dictate your emotions along with the herd, let it simply highlight the path of least resistance.

That’s what I’m doing.

Check it out!

From the Desk of Ian Culley @IanCulley

Markets continue to churn sideways, frustrating most investors.

Instead of allowing the market to dictate your emotions along with the herd, let it simply highlight the path of least resistance. That’s what I’m doing.

Today, I want to share with you two ways to trade the British pound – regardless of its next directional move…

The structural trend for the pound undoubtedly points sideways. A zoomed-out weekly chart makes that clear:

Yes, it has reclaimed a critical shelf of former lows. But it’s messy. And while I believe the pound and other currency pairs will begin to trend in the coming weeks and months, I have no idea what direction they will take.  

So I’m prepared to trade the British pound in either direction.

I laid out the bullish case at the end of January. You can check it out here.

Today, I want to draw attention to those former lows at approximately 1.1950, outlining...

From the Desk of Steve Strazza @Sstrazza

Earlier this week we held our February Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each

Let’s get right into it!

It's the weekly currency edition of What the FICC?

It’s victory at sea across currency markets. But it's not stopping the US dollar from cutting through the chop...

Check it out!

From the Desk of Ian Culley @IanCulley

Challenging conditions prevail across currency markets. 

It’s victory at sea! 

But that’s not stopping the dollar from cutting through the chop.

Does that mean it’ll go on a run, applying downside pressure on risk assets?

It’s tough to say.

Nevertheless, I have one chart for you that provides clarity as the dollar begins to make its move.

Check out the triple-pane chart of the US Dollar Index $DXY, our G-10 currency index, and our US dollar advance-decline line:

At the top, we have six pairs dominated by the euro. I’ve been vocal about the significance of the euro trading below 1.08. It’s basic math.

The EUR/USD comprises more than half of the DXY weighting. If it’s trading below 1.08, it’s messy with downside risks – the perfect environment for a dollar rally.

It’s not just the euro. The lower two panes...