Interest Rate Analysis

Interest Rate QE 4 Steps Withdrawal Process

http://www.danielloh.com/2013/07/qe.html

Fundamentally Analysis suggest when interest rates hike, raised or rise it would fundamental impact financial markets as a whole, it would adversely impact assets class like equities, commodities, forex and property markets.

The above picture is extract and reference from Asia Investment Guru Master Hu Liyang.

The basis on the impact explains that the money flow back into the banking system, erasing speculating and taking risks among various assets class of the financial markets, earning interest income probably as a safe investments where cash is "Kings".

When interest rates rise, mortgage loans will rise, borrower will have to pay more interest for mortgage loans, when borrowers unable to finance their mortgage loans will probably need to auction or force sell their properties to repay their mortgage debt. The rise will also dampen demand for properties because buying a property usually a big ticket purchase will require leverage, the rise of interest rate will deter any form of purchase be it investment or occupation because the buyers financial health are assess by the banks to avoid any potential default hence unable to obtain mortgage loan to finance the purchase.

When interest rate rise also signals that the economy is growing and expanding (recovery mode) hence inflationary pressure will be felt which prompt the central banks to raise interest rate to cool the economy and mitigate risks.

Interest rate hike will prick the inflationary bubble across various assets class of the financial markets when it becomes too hot.

Interest rate rise will strengthen US dollar and selling of US treasury and yield will rise and price will fall.

Irony of current scenario US Federal Reserve Central Banks is hiking interest rates but why US dollar continue to weaken? probably because financial markets are forward looking and with the current US Federal Reserve Chair appointment had seen a change of appointment where current US Federal Chairperson Madam Janet Yellen's term is ending February 2018 with the new appointment of Mr. Jerome Powell an aide of President Trump to lead the US Federal Reserve Bank as Chairman will see any pro President Trump policy making decision.

Technical Analysis (TA) suggest US dollar spot price to fall around 82.50 after rallying since mid 2014 and into 3 years time frame yet to see any significant price correction. Technical Analysis suggest Rounding Top and possible descending triangle chart pattern, a swing setup for further downside movement.

Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.