Gone missing / A healthy correction

In the blink of an eye almost 3 weeks have past since my last post.

I've been really busy at work and occupied with other things in my life that I can hardly sit down to watch the markets as closely as before.

But now, I should be able to get my old routine back and blog more. This should be helpful for me to keep track of my trading and put into words my thoughts. It helps me not be too fickle about my strategies.

Today, the sense of nonchanlance was palpable in the markets while I was in the office. There did not seem to be anything that could lift sentiments and give stocks another boost.

Yes asian stocks rose but it didn't feel like the euphoria of the recent weeks as investors start looking around them to see what could be the next springboard. But there's none right now.

The reality of the world economy still being in deep recession is starting to bite again as it seems increasingly likely we are not in a V shaped recovery.

In FX, safe haven dollar buying dominated the screens. At print (12 am Spore time/12pm est), both the GBPUSD and the EURUSD are already losing 1% and 0.73%.

Lead by the spectacular fall in commodities today (oil -4%), commodity currencies are digging holes in the ground. AUDUSD and NZDUSD are down a huge 2.11% and 1.8% respectively.

The Aud move however, I feel is partly because the market is pricing another rate cut by the RBA following a hold in the last meeting.

Altogether I feel that the selling of the major currencies against the greenback have been a long time coming. Prices don't rise in a straight line and these moves in FX only present better buying opportunities.

My rationale for a weak dollar over the medium term is because the FOMC has to show a willingness to keep a loose monetary policy until the economy has cleared much of its slack and leverage, before there's a good chance of sure recovery. Afterall, u/e rate in the US is fast approaching 10% and rising still.

For now, we've been seeing better than expected economic data, but to solid growth takes 'better than better than expected' data.

This Wed, the FOMC will release their highly anticipated interest rate announcement at 2:15pm est (2:15am spore) and the market awaits to read the accompanying statement. Of course, rates are expected to remain at 0 - 0.25%.

If the FOMC did not mention raising rates and says to keep rates close to zero for an extended period of time, then over the medium term, I'd be a dollar bear. *this is my assumed likely scenario*

If they do announce more details into the exit strategies they might employ to soak up the massive injected liquidity, including increasing fed funds rate before the end of the year, then the dollar might jump against most currencies.

But it all depends on the wording the FOMC uses and how the market perceive to what extent the FOMC is thinking of tightening, if they are at all.

Man, I never did pay this much attention to my school teacher's words in the past.