Henry Liu
Former FPA Special Consultant
- Messages
- 473
The Federal Reserve will probably not surprise the market today and keep the current Federal Funds rate unchanged while leaving the 600 Billion Dollar stimulus in place as economy is showing moderate signs of recovery.
The real market mover will probably be the accompanied statement, where Bernanke is expected to take notice on the recent improvement in Consumer Spending, Consumer Confidence, and perhaps improvement in recent credit and bank loans.
However, focus on tight credit conditions will also be mentioned, and we can always count on the persistent weakness in the employment sector along with slightly above trend inflation as result of the general increases in food and energy prices.
All in all we should expect a near identical FOMC statement from the December 14 2010 release. The phrase "...low levels of the federal funds rate for an extended period" will probably remain in the overall FOMC statement, therefore we will probably not get any persistent market reaction from this release...
However, if Bernanke were to surprise the market and discuss exit strategies or phasing out QE2, market will rush to buy USD; on the other hand, if Bernanke were to concentrate on the gloomy outlook of the US economy, we will probably see EURUSD surge...
But most likely we'll see very limited market reaction today, and unless you've traded this release before, I'd recommend to stay out. This is a very advanced news event that is high impact enough to change market trend, and therefore important to every Forex trader...
So if you have never traded this release, just be present and watch market reaction while listening to your news wire service or Bloomberg TV and try to learn as much as you can, I'm sure you'll thank me later
Historical Data & Chart For FOMC Rate Decision
Thanks,
The real market mover will probably be the accompanied statement, where Bernanke is expected to take notice on the recent improvement in Consumer Spending, Consumer Confidence, and perhaps improvement in recent credit and bank loans.
However, focus on tight credit conditions will also be mentioned, and we can always count on the persistent weakness in the employment sector along with slightly above trend inflation as result of the general increases in food and energy prices.
All in all we should expect a near identical FOMC statement from the December 14 2010 release. The phrase "...low levels of the federal funds rate for an extended period" will probably remain in the overall FOMC statement, therefore we will probably not get any persistent market reaction from this release...
However, if Bernanke were to surprise the market and discuss exit strategies or phasing out QE2, market will rush to buy USD; on the other hand, if Bernanke were to concentrate on the gloomy outlook of the US economy, we will probably see EURUSD surge...
But most likely we'll see very limited market reaction today, and unless you've traded this release before, I'd recommend to stay out. This is a very advanced news event that is high impact enough to change market trend, and therefore important to every Forex trader...
So if you have never traded this release, just be present and watch market reaction while listening to your news wire service or Bloomberg TV and try to learn as much as you can, I'm sure you'll thank me later
Historical Data & Chart For FOMC Rate Decision
Thanks,
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