Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

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If you are interested in contacting for speaking engagements. Please email me at Andrabr9@gmail.com or call 954 903 0638.

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Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.

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USD Trend Driven by Rate Hike Bets

USD Trend Driven by Rate Hike Bets

Since the beginning of 2015, the dollar index level has stagnated and after a brief attempted at a breakout, ‎near 100 it has returned to levels seen 20-months ago. The long term trend in the greenback is driven by ‎interest rate differentials, that are slowly moving in favor of the dollar, but recent volatility in U.S. ‎economic data points, has generated whipsaw price action as the USD trend is driven by U.S. rate hike ‎bets.‎

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During the last week of August communication from the Federal Reserve turned bearish, and the stage was ‎set for a September rate hike, assuming the data was consistent with the current trend. Well, August U.S. ‎economic data has been softer than expected, and the weakness has been broad based. The most ‎disappointing was the jobs numbers, which would have likely confirmed an interest rate hike, despite weak ‎manufacturing survey data.‎

The August jobs data showed that weakness was broad-based. Additionally, payroll growth is moderating ‎since a relatively firm 2014, given just a 181k average monthly payroll gain thus far in 2016.‎

The household survey, was also disappointing. The August gains of 97k for civilian jobs and 176k for the ‎labor force, were mild when compared to the large July gains of 420k and 407k. The average prior monthly ‎declines of 74k and 135k in Q2, where offset by big average gains before that of 464k and 484k in Q1, and ‎‎329k and 322k in Q4 that reflect a net acceleration in both measures since September despite some Q2 ‎setbacks.

The jobs data followed ISM Manufacturing data which saw the survey dip into contraction territory at 49.4. ‎The news saw Fed Fund futures dip driving the chance of a rate hike down to 50%, following a peak of a ‎September hike at 65% following the Jackson Whole Symposium. During this gathering both Fed Chair ‎Yellen and Vice Chair Fischer communicated that the Fed was poised to increase rates, if the data ‎warranted. It appears that traders were slightly off sides and the August payroll nearly eliminated any ‎chance of a hike according to the market.‎
The last straw could be the U.S. ISM services report which dropped to 6-year lows. The headline reading of ‎‎51.4 in August from 55.5 in July brought the index below the prior two-year low of 52.9 and down to a 6-‎year low. There were declines in every component but deliveries. The employment gauge fell to 50.7 from ‎‎51.4 in July, versus a 49.7 two-year low in May that was also seen in February, leaving weakness that was ‎captured in Friday’s jobs report.‎

The upshot is that the Fed has induced yields to climb making the dollar more attractive, ahead of their ‎meeting in late September. The catalyst is that the data continues to trend toward a stronger economy. ‎With the jobs data not cooperating at the moment, the trend in the dollar will likely continue to be ‎consolidation. ‎


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