Battle Or Brethren

If you want to understand the financial markets, you need to watch the central banks. As the largest players in the market, everything they say or do can have a resounding impact on prices.

When central banks have a loose monetary policy, as they have over the last decade, markets tend to rise. When they start to tighten policy, as they did in 2018, volatility usually sets in.

At a highly anticipated meeting yesterday the US Federal Reserve Bank gave the markets exactly what they wanted but not necessarily what they needed.

Not only did they confirm that they'll be taking it slow with interest rates going forward but they also indicated that they're willing to slow down the pace at which they're winding down their massive balance sheet.

What does this mean?

A year ago, it seemed as if the economy was finally strong enough to stand on its own without the help of the central banks. Today, it seems that the United States, Europe, China, and of course Japan may need to continue providing financial support to the markets for some time to come.

Upon the hearing the news that they're not strong enough to survive on their own, the markets are flying today!

Traditional Markets

As the clock continues to wind down on Brexit, it seems the EU says they're not willing to renegotiate. Somehow, it seems that the odds of a time extension on the March 29th deadline, a no deal Brexit, and no Brexit at all are all increasing simultaneously.

According to a report this morning from UBS, it seems that large financial institutions are taking a risk-averse approach and are hedging their positions in case Brexit goes pear-shaped.

On the chart, we can see a pretty clear and familiar range for the GBPUSD from 1.25 to 1.3250.

Earnings Continue

Another 40 or so companies will report their quarterly earnings today. For dessert, Amazon will report after the closing bell.

If some companies are able to get away blaming their poor profits on China, Amazon cannot. So this should give us a pretty good picture of how the market is looking. As did Facebook, by the way, who despite all the #deleteFacebook drama managed to deliver an outstanding report.

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Please note: All data, figures & graphs are valid as of January 31st. All trading carries risk. Only risk capital you can afford to lose.

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