Goolsbee and Bostic gave their assessment of the Fed’s monetary policy
July 5, 2023 3:22 am
The US dollar is still having some problems with strengthening. I remind you that the wave layouts for both instruments allow for a decrease, but the British pound is increasingly focusing on building another upward wave. Since the wave layouts of both instruments have differed slightly in recent months, we might see different movements against the euro. However, the US currency is not in a hurry to grow even against the euro.
US trading platforms were closed on Tuesday for the 4th of July holiday. Therefore, let’s consider slightly earlier data, namely the speeches of Dean Gulsby and Raphael Bostic from the Federal Reserve. Dean Gulsby is considered a “dove” and reported at the end of last week that he is not worried about stock prices in the US stock market. The Fed’s mandate does not mention price stability in the stock market, and the central bank is carrying out more important tasks than ensuring the financial stability of large companies, Gulsby believes. He also expressed hope that the regulator will be able to achieve a reduction in inflation without a recession. “The most important part of the data now is the labor market,” said the President of the Federal Reserve Bank of Chicago, “If the labor market starts to weaken, it will be difficult for us to quickly return inflation to 2%.”
On the same day, there was a speech by Raphael Bostic, the President of the Federal Reserve Bank of Atlanta. Bostic is a “neutral” member of the FOMC, but recently he has leaned more towards the “hawks”. He noted that the rate may increase again at two meetings in 2023, however, most FOMC members expect that this will not be necessary. For this to happen, inflation must show a convincing slowdown in the coming months. “If we need to raise the rate two more times, we will do it, and the pause in June should not be considered as a relaxation in the ranks of the Fed about high inflation,” Bostic believes. “The labor market situation has improved over the past two months, and we are receiving data indicating that inflation is gradually entering a normal state,” said the head of the Federal Reserve Bank of Atlanta.
Statements by FOMC members should be considered moderate. Friday’s labor market and unemployment data are very important, as future changes in the Fed’s rate now depend on them. If the data are weak, we will see one increase, but the second will be in serious doubt. The US currency clearly needs a stronger news background now.
Based on the analysis conducted, I conclude that the downtrend is currently being built. The instrument has enough room to fall. I believe that targets around 1.0500-1.0600 are quite realistic. I advise selling the instrument on “down” signals from the MACD indicator. The wave b is apparently over. According to the alternative layout, the ascending wave will be longer and more complicated, this will be the main scenario in case of a successful attempt to break through the current peak of the wave b. I don’t think the news background is currently more supportive of the euro.
The wave pattern of the GBP/USD instrument has changed and now it suggests the formation of an upward set of waves. Earlier, I advised buying the instrument in case of a failed attempt to break through the 1.2615 mark, which is equivalent to 127.2% Fibonacci. Wave 3 or c may take a more extended form, or wave e in a wedge will be constructed, and the instrument will return to the 1.2842 mark. Selling looks more promising and I advised it two weeks ago with a Stop Loss above 1.2842, but the signal from 1.2615 temporarily canceled that scenario.
The material has been provided by InstaForex Company – www.instaforex.com
The US dollar is still having some problems with strengthening. I remind you that the wave layouts for both instruments allow for a decrease, but the British pound is increasingly focusing on building another upward wave. Since the wave layouts of both instruments have differed slightly in recent months, we might see different movements against the euro. However, the US currency is not in a hurry to grow even against the euro.
US trading platforms were closed on Tuesday for the 4th of July holiday. Therefore, let’s consider slightly earlier data, namely the speeches of Dean Gulsby and Raphael Bostic from the Federal Reserve. Dean Gulsby is considered a “dove” and reported at the end of last week that he is not worried about stock prices in the US stock market. The Fed’s mandate does not mention price stability in the stock market, and the central bank is carrying out more important tasks than ensuring the financial stability of large companies, Gulsby believes. He also expressed hope that the regulator will be able to achieve a reduction in inflation without a recession. “The most important part of the data now is the labor market,” said the President of the Federal Reserve Bank of Chicago, “If the labor market starts to weaken, it will be difficult for us to quickly return inflation to 2%.”
On the same day, there was a speech by Raphael Bostic, the President of the Federal Reserve Bank of Atlanta. Bostic is a “neutral” member of the FOMC, but recently he has leaned more towards the “hawks”. He noted that the rate may increase again at two meetings in 2023, however, most FOMC members expect that this will not be necessary. For this to happen, inflation must show a convincing slowdown in the coming months. “If we need to raise the rate two more times, we will do it, and the pause in June should not be considered as a relaxation in the ranks of the Fed about high inflation,” Bostic believes. “The labor market situation has improved over the past two months, and we are receiving data indicating that inflation is gradually entering a normal state,” said the head of the Federal Reserve Bank of Atlanta.
Statements by FOMC members should be considered moderate. Friday’s labor market and unemployment data are very important, as future changes in the Fed’s rate now depend on them. If the data are weak, we will see one increase, but the second will be in serious doubt. The US currency clearly needs a stronger news background now.
Based on the analysis conducted, I conclude that the downtrend is currently being built. The instrument has enough room to fall. I believe that targets around 1.0500-1.0600 are quite realistic. I advise selling the instrument on “down” signals from the MACD indicator. The wave b is apparently over. According to the alternative layout, the ascending wave will be longer and more complicated, this will be the main scenario in case of a successful attempt to break through the current peak of the wave b. I don’t think the news background is currently more supportive of the euro.
The wave pattern of the GBP/USD instrument has changed and now it suggests the formation of an upward set of waves. Earlier, I advised buying the instrument in case of a failed attempt to break through the 1.2615 mark, which is equivalent to 127.2% Fibonacci. Wave 3 or c may take a more extended form, or wave e in a wedge will be constructed, and the instrument will return to the 1.2842 mark. Selling looks more promising and I advised it two weeks ago with a Stop Loss above 1.2842, but the signal from 1.2615 temporarily canceled that scenario.
The material has been provided by InstaForex Company – www.instaforex.com
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