US FOMC Meeting Minutes 11/24/09

2:00pm (NY Time) US FOMC Meeting Minutes
ACTION: N/A

FOMC Meeting minutes is usually scheduled to be released 3 weeks after the Fed Fund Rate decision.  Below is the entire statement released on Nov. 4, 2009, I’ve taken the liberty of marking some positive and negative comments:

“Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.”

Market reacted with some level of risk aversion after this statement.  I expect to see further extension of this sentiment if the Prelim GDP at 8:30am were to miss expectation, and with a bearish meeting minutes from FOMC, market could retest recent lows (USD/JPY, EUR/JPY, and GBP/JPY)…

I will be trying to decipher Fedspeak (language of the Federal Reserve) in real time and then make a trading decision, this release is basically for the more experienced traders who have traded prior FOMC minutes before and are familiar with the last FOMC Statement, and have the ability to read the market.  It will probably be best to sit out on this release and watch market reaction to gain experience unless you are absolutely sure about trading this.

My past experiences showed that most of the time market will move heavily up and down due to volatility, but at the end of the day market will usually end up exactly where it started before the release.  So it has a high probability of shaking you out of a trade as most traders tend to buy and sell with the market, and this case you’ll only find that the market reversing on you as soon as you entered.  So once again, it is best to stay out unless you’re sure about it.

Related posts:

1. US FOMC Meeting Minutes 10/14/09
2. Forex Analysis – FOMC Meeting Minutes
3. Forex Trading Analysis For US FOMC Minutes 10/12/11
4. US FOMC Meeting Minutes 09/02/09
5. Forex Analysis For US FOMC Minutes 08/30/11
6. Forex Analysis For US FOMC Interest Rate 11/02/11
7. Forex Analysis For US FOMC Minutes 07/12/11
8. Forex Analysis U.S. FOMC Interest Rate 09/21/11
9. Australia Monetary Policy Meeting Minutes 10/19/09
10. FOMC Press Conference Highlights – June 22, 2011

Tagged as: Economic Activity, economic recovery, Fed Fund Rate, Federal Funds Rate, Federal Open Market Committee, Financial Markets And Institutions, fomc meeting minutes, Household Spending, Inflation Expectations, Intermeeting Period, Negative Comments, Open Market Committee, Policy Actions, price stability, Resource Utilization, Stable Inflation, Substantial Resource, Target Range, Term Inflation, Tight Credit