Will the Federal Reserve start taking inflation more seriously soon?
With import prices on the rise, gaining almost 5 points this month up to 8.6% from 3.7% in the YoY data, the steady rise in producer prices since September 2009 going from -6% to December’s 1.8 and gas prices going from steady to slightly raised the US fundamentals are lining up, again, to illustrate an increase in consumer costs. An increased CPI number 1/15/2010 may confirm this.
That by itself is no surprise, but as a red flag for inflation it may trigger a response from the Federal Reserve soon. How soon is soon will be the question.
While the Federal Reserve is benefitting from a relatively cheap USD right now, it will be forced to respond to the data, not only as measure of keeping inflation in check, which would mean a rise in interest rates, but also as a perception enhancing tool for the global economy, therefore global investors.
What that may mean is that the USD could strengthen on its fundamental picture instead of being a safe-haven for the risk averse.
Are we seeing the possibility of “normal” conditions returning soon? I sure hope so.
Triffany Hammond helps traders of all levels, gain the tools, resources and guidance necessary to build on their strengths and work around their weaknesses so that they can make the best possible decisions for themselves in the Forex Market. Triffany is a regular speaker and contributor at 
http://seekingalpha.com/article/180802-dollar-could-break-out-vs-yen
Triffany and all. I recommend that everyone read this link. As some may recall I did a bit on the weekly several days ago, looking for clues. This guy is obviously far superior to my amateur approach. In any event, give it a look….. It seems to support what, Triffany, our leader expert has posted. I am long (in some degree of discomfort – reading “Trading in the Zone” furiously, and listening for all clues.
A clip from a close friend and excellent trader, is also attached. He sent this to me Monday. It is a FYI – for your evaluation only…..
My strategy from now until end of March will continue to be placing multiple small trades and holding for the long term (however many days or weeks it takes to hit TPs). I set NO SLs and will not close any losing trades. I do not read any analyst reports and don’t give a hoot about economic news times. That means I can tune in once a day to take a peek at how things are going, maybe to add a trade here and there and rest of the time just not bother about what’s going on at all. In the meantime I am busy painting my masterpiece. Three months of indulgence and creative fun with acrylics!
Some thoughts on the Yen and why all my trades are Yen related and all Long:
At 0.10% the Nips have the lowest central bank rate of all major currencies.
At -1.2% they are in a deflationary spiral greater than any other G-8 nation.
With a real GDP growth rate of -4.5% the severity of their recession is second only to that of Old Blighty at -5.1%.
Each of these statistics should lead to a weakening currency, no? So, the persistent strength of the Yen has been quite an anomaly. Not only that, but the Japanese government HATES a strong Yen because it makes their exports too expensive. Put it all together and what do you have? A huge buying opportunity for Yen pairs…
Cheers to the group…. Jerry
Hey Jerry … Your friend puts in a good argument for the USDJPY which although has taken a beating from the news has actually held up quiet well, which does suggest a long approach, but to do what your friend is doing on other JPY pairs is risky, like socks, the crosses are made up of 2 pairs and as you can see the EURJPY took a hard knock from the EURUSD today (friday) sending it down some 200 pips with the USDJPY not caring too much to help its brother … i have always said be careful … artists can be a little absent-minded with their socks
But lets finish on a positive note : GO USDCHF GO !!! ONLY ANOTHER 500 PIPS TO GO !!!!
For those of you who are still long GBPJPY, now is a good time to add to that, the GBPJPY has been very respectful of its Daily TL and although it keeps taking shots at closing below, they have been quickly rejected the next day (take a peek at the 4HR chart), it has also made slightly higher high’s (on the 4HR) which is not consistent with a short TL break move, if this 4HR candle closes bullish (its now 9:30am EST) i will put in a long trade with a SL at about 147.50 and a PT of at least the high of 150.70 … any thoughts anyone ?