How U.S. Economy Changed Since Last Fed Meeting

The following table shows how the U.S. economy has changed since the last Federal Reserve monetary policy meeting. As you can see, there have been broad based improvements in economic data which is why I believe that the Fed will sound a bit more optimistic tomorrow. The only area of weakness is in confidence and spending, which is very important but a tinge of optimism is certainly warranted given the improvements elsewhere in the U.S. economy.

I always encourage forex traders to put themselves in the shoes of the central banker and this will be what the central bank looks at during their meeting.

Christmas Week: Breakout or Fakeout in FX?

We all know that liquidity drives up during the holidays but does that mean that breakouts are more likely or fake-outs?

Based upon how the EUR/USD and USD/JPY have traded over the past decade this week, the odds favor a fake-out over a breakout. The following charts compare the trading range during Christmas week in the 2 currency pairs (red bars) to the average weekly trading range for the past 10 years (green bars). For the EUR/USD aside from 2007, the trading range this week tends to be below average. For USD/JPY the weekly range has also been below average every year except for 2001. In fact, the average trading range this week in the forex market tends to be approximately 25 percent less than the average trading range throughout the course of the year.