The S&P 500 took a hit off its highs during Friday’s trading session, smashing through the intra-day support level that we’ve been marking on our charts. Asian indices are today expected to follow suit.
The catalyst for the sudden lurch down has been attributed to Boston Fed President Eric Rosengren’s soundbites. Comments that have been given airtime because of his historically dovish stance on rates now having changed tone.
“If we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate.”
Rosengren’s main concern seems to be that even throughout the global rollercoaster we’ve been riding over the last twelve months or so, the US economy has withstood everything thrown at it and may even be at risk of overheating if interest rates stay this close to zero for too much longer.
“There are also longer-term risks from significantly overshooting the U.S. economy’s growth.”
There was however no mention of whether September or December were actually in play, and just seems like towing the Janet Yellen line that we saw out at Jackson Hole. I’m not as keen on buying into the September is in play rhetoric just yet.
For me, the narrative hasn’t really changed and indices traders really have no need to get too carried away in a short term momentum move off highs in the mother of all bull markets.
But you watch all the doomsayers that have been preaching shorting the index from thousands of pips lower come crawling out of the woodwork with reasons why the top is now in.
I’m not saying they’re necessarily wrong this time, just that even a broken clock is correct twice a day!
On the Calendar Monday:
Very light on the tier 1 economic data to begin the week.
While it’s not a Federal holiday in the United States, Sunday evening trading in the early Asian Session will start off a little slow due to it being September 11.
Use the session as an opportunity to keep the technicals on your MT4 charts clean and work out your positioning for the week ahead.
Dane Williams – @VantageFX
Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, forex news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently, any person acting on it does so entirely at their own risk. The expert writers express their personal opinions and will not assume any responsibility whatsoever for the Forex account of the reader. We always aim for maximum accuracy and timeliness, and FX broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.