Mark Wogan: Powell versus Trump – the verdict.

Good morning readers.

While not a knock out win by Jerome ´The Power´Powell, he didn´t pull his punches and ´Thumper´ Trump didn´t get it all his own way! With a hike now and a comment that some further gradual rises are warranted, as well as reiterating the Feds independence from any political concerns, Powell declared the winner by unanimous point decision :).

Joking aside, and outside of the Powell v Trump ´battle of independence´ the FOMC were more hawkish than many analysts expected. The language used did take into account a less certain outlook with risks ¨roughly balanced¨and although they saw some softening in the economy going forward, these developments haven´t fundamentally altered their outlook.

What this means over the coming days into the New Year is that we continue to have a key divergence in policy between the Fed and the ECB. The former hiking although stating that policy is not on a pre-set course with the latter still on hold until after summer 2019.

We will have to wait to see how equities unfold (not looking good so far) and similarly the Bond market as these will have a big part to play in how the USD reacts and ergo, the eurusd. But the outtake is that the euro remains on the back foot. In reality then from a macro perspective, no real significant change to where we were.

Therefore, as we are traders and not analysts we simply get on with the job at hand. Mark up our charts, watch the price action and …. trade.

The Daily Chart

From the daily perspective we are still bounded by 1.13 and 1.1450. It does, however, look to be edging higher and with Italy now seemingly solved I suspect we are heading above 1.14. If we start to trade below 1.1350 and close below this would change my view.

The Hourly Chart

Levels noted as per. They are the same as yesterday so you´ll note how R2 acted as the cap and was a good short for our model strategy.

That´s a wrap from me today and its also a wrap until next year when I´ll be back on the 2nd January

All that remains is to say thank you for reading my posts, I hope they have helped and have a great Christmas and New Year.

See you all bright and early to kick off 2019!