“The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable.”
Since the Brexit incident, a lot of analyst forecast that the July Fed Rate Hike is equivalent to zero and the chances of 2016 rate hike has dropped to 22.9%. There are some traders even speculate of rate cut.
But I beg to differ.
The concern of Brexit from Fed and the key person Yellen perspective is that the impact to the economic but as we can see from the past 1 month, the economic don’t really impacted much by the effect of Brexit, more on speculation basic. If we talk on the US economic itself, it is advancing to its peak.
The US dollar index just break their mid term resistance on 96.7 and attempt to rally higher. This mean that more bullish speculators trade on that and the bearish speculators has retreated and realized profit.
The stock market has create a new high on its index accompanies by its US economic data which proven one of the strongest month this year. With ADP Nonfarm employment change and Nonfarm Payroll create a new high. Positive ISM Manufacturing Employment and Core PPI, Continuing Jobless Claim getting better, although CPI didn’t live up to the forecast but it still maintain last month performance.
This is to say, July is the best month for FOMC to rate hike. They can try to increase 10 basic points instead of 25 basic points and see how the global economic react to it but to have the first rate of 2016. My opinion is, this month is the best month to make the move.
The S&P 500 is trying to break 2177 but we can see some distribution symptom happen above 2160 which the bull trying to half their position or exit their trades. Currently the 20MA is reaching higher to 2116 where the support might tested there and the upper BB has widen to 2216. The Q2 earning for most blue chip company didn’t show positive sign,a dip is expected but whether the upward continuous trend will sustain, the pullback support shall be checked and this mostly relied on next thursday 28th July, FOMC rate decision.
US economy data for July:
Happy investing and trading Pal and stay safe!