A1 Trading Company

August 24, 2023

Jackson Hole Symposium Expectations

Frank Cabibi

Tomorrow, members of the Federal Reserve Committee will meet at the Symposium in Jackson Hole to further discuss the rate path of monetary policy. Powell is going to speak as investors will try to interpret the clues offered in the speech. Here is what we can deduct to what would be the most likely outcome of future policy rates.

EdgeFinder Analysis

USDJPY is now sitting at a Bullish rating despite seasonality suggesting lower moves for the month. COT is still long the dollar while the yen remains heavily short. Retail is the opposite which suggests a bullish bias on the sentiment side of the data.

Tomorrow's Fed meetup will be rather impactful on the dollar going forward as investors try to guess where interest rates are headed for the remainder of 2023. The Fed's main goal - as stated before - is to bring inflation lower while achieving a soft landing that they desire. So far, the economy has proven to be more resilient than they anticipated, which could be a good sign that they will continue on their monetary path of restrictive policy.

This doesn't just mean that rates will stay high for a while, but it could also mean that we'll see another rate hike by year end. Gold is highly reactive to this sort of data which is pointing to lower moves on a 1D timeframe. Despite the recent run higher, gold could be gearing for another leg lower.

Price shot up yesterday after PMI data came in cooler than expected. Recently, the metal has been very directly correlated with the US stock market indices. But today's candle is suggesting some pullback. If price closes like this, we could see a retracement back lower to the $1880s range.

AU is another pair that moves pretty much with the stock market, but many factors say that this pair should move lower. Aussie is beat by the US in every category, making this score a "Very Bearish" -10 score overall. Trend readings, Seasonality, Sentiment, etc. all point lower on the pair.

The Fed's attempts at fighting inflation has been aggressive up until this year as we've seen less consecutive hikes. It's not that investors are brushing past the fact that the US will remain in restrictive territory, but they also are looking out for that soft landing goal Powell continues to talk about. As bond yields rise, it will continue to bring strength to the dollar. That's perhaps one of the most important indicators to watch when trading USD pairs.

Retail Spotlight

If we solely focus on USD pairs, retail investors are clearly bearish dollar right now. This is not a sign that USD will fall, in fact, it's quite the opposite. When retail has a strong stance against one asset, is usually means that asset will move the other way. In this case, it looks like the dollar will continue to be bullish overall.

Smart Money Spotlight

Something interesting to watch on the COT front is gold's institutional positioning. For the past couple weeks, smart money has greatly declined in net long positions, making gold a less bullish asset to watch. If the trend continues, and the Fed remains harsh, and the 2-year yield pushes past 5%, gold will likely continue its downtrend.

Fundamental Spotlight

Here are the central bank forecasts for the USD. As we can see, rates are expected to come up just a tad more near 5.5% by Q4 of this year. Then after, rates are expected to fall as the Fed discusses rate cuts. What investors want to know from the Symposium is whether they will keep rates or hike them this year. This forecast could change based on what they say tomorrow. However, it still seems likely that they will try to push higher one more time.

A1 Edgefinder

All-In-One Fundamental Dashboard!
Simplify your fundamental analysis with our all-in-one fundamental dashboard! 
Discount code: READER

Learn more

My Crazy Trade On Gold: Up $8000

Hey Traders! This week has been wild for Gold! Thanks to insights from the EdgeFinder, I've been in a trade on XAUUSD since May 3rd. Initially, I jumped in due to weak jobs and PMI data, sticky inflation, and solid support/market structure. Here’s a quick look at my gold trade: Entry Recap: On May 13th, […]

Read More
Is Gold the Buy of 2024?

Rates move lower after the BoE announced their latest monetary policy report to keep rates unchanged at 5.25%. Unemployment came in higher this morning with the 30-year bond auction coming up Thursday afternoon. In the midst of a slow news week in the US, gold is sitting at a very favorable position according to the […]

Read More
Yields Fall Ahead of Earnings

More earnings reports come out this week is causing an inflow of buyers in the equities market while yields begin the week on a decline. Last week's Fed meeting showed up as "less hawkish" than investors expected causing risk appetite to increase at the start of the summer months. EdgeFinder Analysis As we come off […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
homesmartphonelaptop-phonemenumenu-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram