5 Reasons Why the Federal Reserve is a Failure!

Good Article from www.bankholic.com for all forex traders

No single quasi-private institution has as much influence on the worldwide economy as the Fed, and as a leader can head this institution for an indefinite term, no one man is as influential on the markets as the Fed Chair.
The Dollar has plummeted in the currency markets and shows few signs of recovery or even stabilization. The new style and policies that accompanied Bernanke into office have made the Forex markets more volatile than ever and even more difficult to predict. An examination of what has gone awry can help Forex traders understand this new era at the Fed.


1. The Fed ignored the signs

The Fed has stated that it will never act as a regulator in any financial market, but it has the duty to use its influence for reform when it sees signs of consumer exploitation. Since as early as 2001, at least two senior officials inside the Fed urged its board to call for tighter regulations in the housing markets, especially in abuses that were clearly evident in the handling subprime mortgages.

2. The Fed did too little too late

3. The Fed kept interest rates too low for too long

4. The Fed’s view of inflation is flawed

5. The Fed gives gold stars to those deserving detentions

original sources:http://www.bankaholic.com/2008/federal-reserve-is-failure/

Technical focus: EURJPY and AUDUSD

EURJPY

Recently we posted a EURJPY in chart in which we were looking for a sizeable follow through lower for the pair on the risk aversion theme. The sell-off was alas quickly aborted as the risk aversion them came into play -note, however, that EURJPY was unable to close above the key 5-day SMA. All in all, as long as the atmosphere of fear reigns, we would expect the JPY to strongly outperform EUR. A possible retest of the 150.00 area may await here soon. Have a look at AUDJPY and NZDJPY as possible alternatives to this trade.

AUDUSD

AUDUSD topped out right at the 0.764 Fibonacci, which many favor employing as a retracement level when looking for a market turnaround. As mentioned above, the relative yield curve developments are beginning to favor the USD relative to AUD. There is little technical confirmation that a new sell-off wave could develop other than the rejection of the rally at the Fibonacci level, but continued risk aversion here could continue to see more pressure on AUD with its tendency to perform poorly when equity markets are tumbling.

JPY sharply stronger across the board as 100.00 USDJPY level sees first test. JPY crosses set to tumble?

US Retail Sales on tap today, but market more focused on risk theme again on hedge fund failure news.