Come on, a week of super macro news starts tonight... Now is still the calmest before the storm.
Tonight at 8:15, ADP employment figures..
At 8:30, the second-quarter GDP..
Currently, most institutional predictions on GDP are biased towards 2-3%, with the relatively accurate GDPNOW model giving a forecast of 2.9%.. (GDPNOW updates data in real time.)
GDP will actually put a lot of pressure on Powell.. Because if the ADP employment shows good results, GDP growth is fast, and the CPI (inflation) released on July 15 is still rising.. Then this whole logic of strong economy, good employment, and uncontrollable inflation completely supports Powell's reasoning to maintain high interest rates and not cut rates...
Now the market has bet that there will be no rate cut in July, with two rate cuts expected within this year, and the probability of the first cut in September is greater than 65%.. (After July, there will only be three FOMC meetings left this year in September, October, and December.)
As analyzed yesterday, if there is an intention within the Fed to cut rates in September, then the probability that Powell is currently making some dovish remarks is also relatively high (to calm the market, and to avoid giving the market too much impact next time).
But if the economic and inflation data are very anti-rate cut.. Plus Old Trump just visited the Fed last week, putting a lot of pressure on Powell..
Tonight, Powell is expected to be Alexander.. How should he say it? Will he continue to stubbornly say "wait for further data"?
There is also another piece of fruit to eat..
Nick, who is known as the Fed's mouthpiece, after hinting at a dovish stance in yesterday's speech.. Today, he hinted again, indicating that today's FOMC meeting decision may unusually have two board members voting against... This situation has never occurred in the past 30 years (or 259 policy meetings).
It even quoted a saying: "Old Trump will eventually have an impact on every institution, perhaps it's now the Fed's turn to no longer resist."
What kind of fruit is this? Let's elaborate...
The Fed consists of 12 voting members, including 7 board members and 5 district Federal Reserve Bank presidents.. In the vast majority of decisions, there may be disagreements in meetings, but usually, when announced, they will reach a consensus to maintain stability and credibility in front of the public.
Historical data shows that between 2008-2013, the average FOMC meeting had at most one opposing vote. Most were district presidents. Opposition from board-level members is very rare.
Externally, it is speculated that the two board members who might vote against this time are Waller and Bowman, both of whom have previously leaned dovish and advocated for rate cuts.. They are also appointees of Old Trump.. One could say they are Old Trump's people..
So, at this current point in time:
1. U.S. stocks are at a high position.
2. Inflation is still above 2% and the July CPI has risen a bit..
3. The market is betting on a rate cut in September, expecting hints to start in July..
If tonight's FOMC meeting is announced, although internally still maintains a hawkish stance and does not cut rates.. but if two board members (any one of whom could become Powell's successor next year) jump to oppose simultaneously....
This would break the Fed's 30-year "consistency", reflecting not only internal decision-making division but also hinting at Nick's statement... The pressure from Old Trump is only getting greater.. How much longer can the Fed hold on?
Well.. The fruit has been eaten, the size of this fruit will depend on tonight's announcement..
Although this piece of news does not really help much with tonight's trading strategy... Because we also cannot predict the results of tonight in advance and whether Old Powell will be dovish....
Okay, let's review yesterday's thought process, with pending orders around 11.80 up and down 200, after reaching 11.82, I exited at 11.90.. When it came back down, I also entered at 11.78.. This low long position will continue to hold.. Probably until after tonight's FOMC meeting. Up to around 11.90, I will still continue to pull back a bit..
Currently, from a technical perspective, it still looks like we should continue to oscillate and wait for the major news tonight.
The support for spot orders is below at 116.8K, with slight pressure above at 119K, and there’s also a wave below 120K.
In terms of pending orders, a bunch around 11.90 to 120K has just been completely withdrawn.. I don't know why..
So tonight's scenario, since I currently hold a half-position low long, the most ideal scenario is still to push up first... I can enter another position, then when the GDP data is released, around 2.8 or 2.9.. If the negative data dips, I can re-enter.. Then the FOMC meeting might bring a dovish surge of 120K+ to clear out the shorts around 121K..
Am I thinking too much? Haha
Anyway, let's not worry about that, in short, the only conditions for a short tonight are: 1. Before the GDP data is released, 2. Prices near 11.90.. If the GDP is released negatively, then just ride the trend and run; if the GDP is released positively, then run even more.. (This means that the GDPNOW data has issues.. Well.. Maybe this is when the insiders start to create data for rate cuts.) Absolutely no shorts before the FOMC meeting... In short, the risk of shorting tonight feels a bit high.. It's okay not to trade..
For a low long position, it has already been initiated last night, and it can also wait for the GDP data to dip before entering again.. If the GDP data does not dip, then tonight should not bet on a low long position..
If tonight unexpectedly turns hawkish, and breaks below 115K, I will run away..
