Predicting where markets are headed remains a risky occupation. From Main Street to Wall Street, expectations about everything from interest rates to stocks remain mostly wrong. Turns out, that's not such a bad thing, at least not yet.
Currency markets are the latest victims of the market's inability to guess right. Just a few weeks ago it looked like the dollar was going higher. Strengthening wasn't because of the greenback's inherent fundamentals, but more because it was seen as the last man standing as other currencies faltered. While the Federal Reserve had finally begun winding down its financial stimulus, other central bankers were believed ready to keep printing money in an effort to boost their economies' flagging fortunes.
The dollar instead broke sharply today against both the yen and euro, falling below 80 on the trade weighted index. Fed officials maintain they won't be raising interest rates anytime soon, while their counterparts in Japan and Europe zone appeared to take the opposite tack. The Bank of Japan appears to be backing off any new measures, while the European Central Bank maintains it isn't going to embark on quantitative easing of its own.
The result of this jockeying is markets that remain rangebound. Stocks broke sharply the last few days after making new all-time highs, triggering worries a correction was at hand. Instead, indexes tried to hold chart support. Everything from bonds to currencies remains similarly deadlocked, which isn't a bad thing. The cost of money remains cheap, despite all the fears that deficits in the U.S. would trigger runaway inflation and a host of other ills.
Not that all prices are flat. The CRB index is testing winter highs, as investors appear to be sticking around the commodity space. Gold is trading back above $1,300 an ounce after holding chart support, while crude oil is also higher. Supplies in the U.S. remain huge, but worries about Ukraine and talk of shrinking gasoline inventories gave a boost to energy prices once again.
Amidst this backdrop, first quarter earnings begin to come out today. While most companies won't report for a few more weeks, there's talk that profits may not be as weak as expected. That could be yet another factor keeping markets consolidating as spring begins.
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Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and farm management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key farm crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.
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