Is There a Sentiment Extreme in the Euro as the Fed Looms?
I am not saying the high is in for the euro, but I am saying that if something clicks positively for the dollar tomorrow (July 26), there is a potential for a sharp correction lower as euro price followers to hit the sell button, asserts Jack Crooks of Black Swan Capital.
Why, sometimes I’ve believed as many as six impossible things before breakfast.
—Lewis Carroll, Through the Looking Glass
Tomorrow we hear from Janet & Company, aka the U.S. Federal Open Market Committee. It seems most analysts are expecting a more dovish tone given inflation hasn’t materialized.
In case you haven’t noticed, economists far and wide are now attacking the Fed of its use of the Phillips Curve as a model for inflation. Economists as far back as Milton Friedman and Paul Volker believed the Phillips Curve was flawed.
Despite the poor reviews for the Phillips Curve, Janet & Company must cling to something; it’s the “give me a model” mentality, no matter its detachment from the real world.
Some are expecting a repudiation of the Phillips Curve Wednesday and tacit confirmation of the view the Fed has no idea if inflation will materialize.
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