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Getting Long on the USD, As FED’s Bostic Mentions 75 and 50 bps Hikes

Posted Wednesday, September 28, 2022 by
Skerdian Meta • 2 min read

The USD has remained the only safe haven and in these troubled times when everything is too risky to buy, investors have turned to the USD. The FED raising interest rates really fast this year has also helped the USD and they will continue to raise interest rates at the current pace, according to FED officials. The Atlanta FED president Bostic was the latest to do so a while ago today.

EUR/USD H4 Chart – Selling the Retrace at the 20 SMA

Is the retrace over?

Although, today we have seen a decent fight from the buyers as EUR/USD retraces higher. We have decided to open a sell signal in this pair at the 20 SMA (gray) on the H4 chart, but buyers are trying to push above it as well at the moment. So, let’s see if they can panage to push above and hold, otherwise the price will likely reverse down.

Atlanta Fed President Bostic Speaking

The baseline right now is a 75 bps increase in Nov and 50 bps in Dec
Some evidence of improvement on the demand side but it’s preliminary
Supply side improvements have not come in as fast as expected
There’s no evidence of dysfunction in the bond market
Doesn’t believe a US recession is a foregone conclusion
Household balances “seem to be leveling off” and will be watching for a decline as a sign demand will cool
Feels the US has ‘considerable momentum’ and is less susceptible to contagion
Rents leveling off would be a ‘really positive development’

On the other side of this, comments from Druckenmiller are crossing now and he says his baseline is a hard landing next year.

Pending Home Sales for August 2022

Pending home sales for August -2.0% vs. -1.4% expected
Prior month -1.0% revised to -0.6%
Pending home sales index 88.4 vs. 90.2 last month (revised from 89.8).
Midwest -5.2% to 88.4
Northeast -3.4% to 76.6
South -0.9% to 105.4
West rose 1.4% to 71.0

An index above 100 means a higher level of activity relative to 2001. The Pending Home Sales Index (PHS) is a leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.