A Forex View From Afar

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Meet the Super Fed

Written by A Forex View From Afar on Tuesday, July 15, 2008

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There are some people who like to focus only on one thing, and they usually
they have a highly effective way to reach their goals. At the same time,
there are others who like to focus on a lot of things all at the same time,
and due to resource scarcity, and not having enough time, money or simply
not having enough grey material, ( brain or intelligence), to focus on that
impressive number of details at once, they fail to achieve anything at all.

Usually, a Central Bank has two main focus points: fighting inflation and
assuring the stability of the financial sector. This is not the Federal
Reserve’s case, and they are assuring growth, low unemployment, fighting
inflation, financial stability, bailing out banks/realtors, regulating every
possible industry that has any connection with the financial sector,
assuring the investors buy the treasury yields and so on.

A little too many tasks for the Fed, some would say. We have to wonder how
exactly the bank will reach any of this targets since inflation is sky-high,
there is no growth, there is no financial stability (just watch the XLF, the
exchange traded fund for the financial sector), who would want to buy a
treasury now that pays 2% annually when the dollar looses that much in a

The dollar index has bounced off support, the market has not been able to
find sellers down there, and that may be due to the fact that Central banks
around the world need a stronger dollar so that their regional currency does
not suffer dollar inflation. A stronger dollar also then eliminates the
speculative part of the oil bubble. We’ll see it in the Swiss franc. Watch
that daily chart; it is forming a possible swing point long that could get
confirmed this week. (No laughing, the technical oversold reversal may be

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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