FED goes soft citing risks: Winter is coming

The Federal Reserve indicated Wednesday that it was done raising interest rates for now, fueling a market rally. Officials voted to hold their benchmark rate steady and delivered an about-face from their policy stance six weeks earlier. Last month, they raised their benchmark rate by a quarter percentage point to a range between 2.25% and 2.5% and signaled two more rate rises were likely this year. “The case for raising rates has weakened somewhat,” Fed Chairman Jerome Powell said at a news conference after the central bank’s latest policy meeting.

US GDP to slow down quite a bit

The U.S. economy’s brief flirtation with 3% growth is over for now, economists say, cut short by a dimming global outlook, market tremors and sluggish business investment. Gross domestic product, or the total value of goods and services produced in the U.S., grew at a 2.6% annual rate in the fourth quarter, economists estimate in a Wall Street Journal survey conducted this week. Output will grow at a 1.8% clip in the first quarter and a 2.5% rate in the second quarter, according to the poll. That would average out to 2.3% growth for the nine-month period through this June—not bad, but slower than the 3% growth notched in the year through last September.

Consumer : Tucking the cash away

Consumer confidence dropped in January for a third consecutive month, likely hit by political discord in Washington, in addition to market and economic uncertainty weighing on U.S. households.

The Conference Board on Tuesday said its index of U.S. consumer confidence fell to 120.2 in January from 126.6. It is now down 17.7 points from October, marking the largest three-month decline since October 2011. Economists surveyed by The Wall Street Journal had expected a drop, albeit a less dramatic one.

House Prices are cooling

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 5.2% in the year ending in November, down from a 5.3% increase reported in October. Price growth slowed considerably in the final months of last year compared to the beginning of the year when prices were growing more than 6%. Many economists expect it to slow even further this year, with price growing in line with inflation at around 2% or 3%. That could be welcome news for buyer who have been struggling with afford ability as mortgage rates rose late last year.

As it is the US economy had peaked in 2018 but the shutdown will worsen the situation in the coming months. The partial government shutdown that ended Friday will cost the economy about $3 billion in reduced output in 2019, the nonpartisan Congressional Budget Office said Monday. In a new report on the shutdown’s effects, CBO said the 35-day closure will shave about 0.4 percentage point from the economy’s annual rate of growth in the first quarter of 2019. The agency now projects gross domestic product will rise at a 2.1% annual rate in the first three months of the year, down from the 2.5% pace anticipated before the shutdown, though CBO cautioned the estimates are highly uncertain.

FXcot.com is running high performance trading system trading forex markets via MT4 and institution grade FIX-API pools. You can look to end of the page to see the continued performance of the system and how any client can take advantage of these high quality returns.

Trading Charts

SPY

SPX on hourly charts show lagging movement above 2680. Classic setups for a strong correction. Possible move to 2600 is on the cards here and possibly lower to 2550.

VIX

EURUSD


EURUSD DAILY CHARTS are mirror image of the dollar chars. The pair took the tops at 100 DMA at 1.1450 and moved to 1.1510 post FOMC. But the movement is hardly convincing as the pair shows no follow up movement in asia or europe. This suggests that EURUSD could fall below 1.14 again.

DXY

Dollar Index has hit the 200 DMA for first time since 2018. A definite opportunity to go long the dollar. We prefer Short EURUSD and Long USDJPY.

VIX

VIX has fallen under 20 and staying below for now. But it could move higher from the support lines at 16

FXCOT trading system has been powering higher in 2019. The January returns has been impressive with a +16.5% return addition to the portfolio. This is a system made for big bucks. The historical performance is shown below from 2010 to 2017.

The more recent performance since 2018 till date is shown below.
2018-2019 performance

2019 performance

The latest trade was a brilliant long EURUSD trade taken at 1.1485 and closed at 1.1510 almost the top.


The trade added +1.7% to the returns for January bringing the total to +16.5%

As you can see the performance of the system is absolutely brilliant. If you would like to start trading on your MT4 account or on your FIX accounts, please reach out to us: Contact Us

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