Today’s FOMC Meeting will probably not surprise the market as much, considering that the Fed has kept rates at around 0.25% for the past three years, injected two rounds of Quantitative Easing (QE1 and QE2) into the economy, plus Operation Twist by swapping shorter-term bonds with longer ones, there aren’t much left for the Fed to do except for wait and see…
FOMC
Today’s FOMC Meeting will probably not impact the market as much, as the Fed probably ran out of new measures to stimulate the economy. As a matter of fact, most analysts agree that the Fed will be leaning towards providing a “clearer guidance” rather than a policy change, or in other words, inflation and unemployment targets for rate changes… With the Fed keeping rates at around 0.25% for the past three years, adding two rounds of Quantitative Easing (QE1 and QE2), Operation Twist by swapping shorter-term bonds with longer ones, and the latest joint liquidity operation with other central banks by cutting the USD swap rate to 0.5% above the OIS, there aren’t much left for the Fed to announce today except for perhaps QE3…
Here is the forecast for the US Prelim GDP q/q :
8:30am (NY Time) US Prelim GDP q/q
Forecast 2.4% Previous 2.5%
ACTION: USDJPY BUY 2.7% / USDJPY SELL 2.1%
The Trade Plan
We are looking for a deviation between 0.3% from the forecasted figure of 2.4%. Therefore if we get a 2.7% on the third quarter GDP, it would be US Dollar positive. We will BUY USD/JPY. However, if we get a 2.1% release or worse, then we would be BUYING EURUSD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.
Today’s FOMC meeting goes back to the new format where the committee announces its rate decision and releases the FOMC Statement at 12:30pm, then Tripple B (Big Ben Bernanke) hosts a press conference at 2:15pm, where he is expected to talk about the recent FOMC Statement and answer questions from onsite media members. What is also expected during today’s meeting is a new quarterly Economic Projections, and here is the release for June 22, 2011:
Here is the forecast for the US Advanced GDP q/q :
8:30am (NY Time) US Advance GDP q/q
Forecast 2.4% Previous 1.3%
ACTION: USDJPY BUY 2.7% / EURUSD BUY 2.1%
The Trade Plan
We are looking for a deviation between 0.3% from the forecasted figure of 2.4%. Therefore if we get a 2.7% on the third quarter GDP, it would be US Dollar positive. We will BUY USD/JPY. However, if we get a 2.1% release or worse, then we would be BUYING EURUSD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.
Today’s FOMC Meeting Minutes will probably dredge up memories from the last FOMC rate Statement, where the market took a dive following the FOMC Statement. Here’s the complete statement released by the Feds on September 21, 2011:
Fed. Chairman Bernanke is expected to announce new measures today to further ease the long-term interest rate while try to resuscitate the ailing economy suffering from perhaps the worse recession since the 1920s. Since Bernanke’s announcement in Jack Hole, Wyoming on August 26, of changing September’s Fed meeting from a single day to two days, market has been speculating that Bernanke is up to something… as a matter of fact, many analysts are predicting that Bernanke will do one of three things:
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