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FED QE ON IT’S WAY OUT?

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Markets are a bit shaky at the moment and the main culprit is the Fed’s QE (quantitative easing) and the concern that the Federal Reserve will being tapering its $85 billion bond buy back program. The concern is real and the issue is that investors are asking themselves ‘what will happen if the tapering begins?” Binary options traders, more focused on the short term, may not really be all that concerned with this question but the effects of such a move by the Fed should be well understood. As some ex-Fed members, like Andrew Huszar explain that the whole idea behind QE is a problem and it’s not really fixing the real problem.

 

To CNBC, Huszar stated that the real problem was the banks and that they are a venerable cartel system in the US. Needless to say, on that comment the segment was broken and CNBC moved on to a different issue of the day. But the point is, Huszar has got to be listened to. The tapering is needed and required for the future.

 

How to piece this all together into a meaningful strategy for the day ahead? Great question with no simple answer to be honest. The fact is, markets are jittery and its evident by the reaction seen in the stock markets in the last few days. For example, yesterday the S&P fell 0.24% to 1767. Although nothing all that dramatic, it’s a directional bias issue now. What we mean is that the strength and momentum seen in the US stock markets for week, is all but gone now. This is not to say that it won’t be back. After all, the economic fundamental s in the US are rather strong with the recent NFP report proving that the US economy was well on its way back to prominence.

 

The day ahead may be even more volatile than yesterday as speeches from Bank Of England Governor, Carney may give impetus to the quiet EU session. Expect this at 10:30 this morning and things can get very interesting for the GBP/USD and EUR/GBP if any mention of interest rates is made. However, beyond this speech, there’s literally nothing to wait for in terms of economic indicators and markets will be completely focused on the charts. Eyes on glass is expected from traders as the volatility of such pairs as the EUR/USD will be at the forefront.

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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