This week, the US Fed turned dovish and all risk assets like Commodities, Stocks, and EURUSD have a very strong rebound. Two weeks ago, Powell stated stating they are not sure whether the interest rate is tight enough. ironically, now they are saying they are discussing reducing interest rates in 2024.
One of the key reasons that the US might reduce interest rates next year is the US election. Nov 2024 will be the US election and normally the government would prefer the stock market and economy to have good outlook to be able to win the election. Hence, reducing interest rates will be one of the best ways to boost the economy.
Another reason is the recession in 2024. As you can see in the following graph. The grey color period is the recession period in the past.
Every time in history whenever the 10-year Treasury Interest Rate minus the 2-year Treasury interest rate falls below 0 and rebounds, then after a while, recession will come. This has signaled that a recession will come, no matter whether it is a soft landing or a hard landing.
However, although there are good reasons to reduce interest, please also take note that it could be reducing interest rate in 2024 at first but then there is always a possibility of back to increasing the interest rate if the thing does not go as expected. Hence, we must always respect the market and always believe that anything is possible in the market.
This week, For EURUSD, the key announcements are as follows.
- 19 Dec (Tue) – Europe CPI
- 22 Dec (Fri) – US PCE
For AUDCAD， we have key announcements are as follows.
- 19 Dec (Tue) – Canada CPI
We do not think these announcements will cause big volatility ( We could be wrong too). However, you can stop trading to avoid these announcements if you prefer to play safe.
This week will also be our last trading week. If you have followed us for some time, we normally do not recommend trading during the holiday season due to low trading volume and it is easier for people to manipulate the price. You can refer to Forex Trading in the Holiday Season for more information.
Recommendation
With this outlook, for the holiday season, we strongly recommend all Ophiuchus and Limitless EA users to schedule to stop trading for this period starting from 22 Dec till 9 Jan. You can use the stop trading period feature in the EA to do that. You can also decide to start the stop trading for a longer period to avoid those key announcements for this week too. (e.g., stop trading from 18 Dec and only start trading after 9 Jan) if you would like.
We also would like to wish you all Merry Christmas and Happy New Year. Thank you all for all the support for all these while. At this year’s end, we will release some new EA and new features for the current EA too. Please stay tuned for our email and update.
Disclaimer – Please note that Limitless Trading is not liable for our recommendation and is not responsible for any loss or profit caused by this recommendation. You should assess your circumstances and perform your research to make decisions for your trading.
