Trading Strategies Summary 15.03.2017: Fed raised rates, but kept dot plot for 2017 and 2018 unchanged

Fed raised rates, but kept dot plot for 2017 and 2018 unchanged

The U.S. Federal Reserve raised the target overnight interest rate by 25 basis points to a range of 0.75% to 1.00%, as widely expected.

However, the Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is "close" to the Fed's 2% target, it noted that goal was "symmetric," indicating a possible willingness to allow prices to rise at a slightly faster pace.

Further rate increases would only be "gradual," the Fed said in its policy statement, with officials sticking to their outlook for two more rate hikes this year and three more in 2018. The Fed lifted rates once in 2016.

Fresh economic forecasts released with the statement showed little change from those of the December policy meeting and gave little indication the Fed has a clear view of how the policies of Donald Trump's administration may impact the economy in 2017 and beyond.

There are currently only 10 voters on the FOMC and the vote was 9-1, with Minneapolis Fed President Kashkari dissenting in favor of no change.

In the projection materials, only the 2019 dot changed. FOMC participants' assessment of the appropriate pace of policy firming puts federal funds at 1.375% (two more hikes) by end-2017 and 2.125% (five more hikes) by end 2018. These medians are unchanged from the December dots. The 2019 median went up 0.125 bp to 3.00%, which is consistent with the longer run view, also unchanged at 3.00%.

The median view on the change in real GDP this year was unchanged at 2.1%, while that for 2018 rose 0.1-pp to 2.1% and that for 2019 was unchanged at 1.9%.

The median projection for the core PCE inflation rate this year rose to 1.9% from 1.8%, but projections for 2018 and 2019 were both 2.0% and both unchanged from the December materials.

FOREX - MAJOR PAIRS:

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FOREX - MAJOR CROSSES:

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PRECIOUS METALS:

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It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long-term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short term.

How to read these tables?

1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex)  - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.

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