Markets in tight range ahead of FOMC announcement
City Index January 29, 2014 2:13 PM
<p>The FOMC announcement is due tonight – the first since they shocked us with a $10 billion cut in QE. The markets are eager as […]</p>
The FOMC announcement is due tonight – the first since they shocked us with a $10 billion cut in QE. The markets are eager as this will be the last time Ben Bernanke will preside over the committee before passing over the reigns to Janet Yellen. The markets are still expecting a constant cut of $10 billion per month. Now this is the Fed and they have surprised us before so trading is likely to be be very tight ranged today in the world of FX. Most will wait until the announcement, before trading. The US has had mixed data out this month, most notable was the extremely weak data from the non-farm payrolls which shocked the market. The lower figures were put down due to the recent freezing weather the US has sustained. This, mixed with a drop in unemployment and a smaller deficit in the trade balance, will all be taken into account. The market is expecting the cut of $10 billion so if a lot of this is priced in an increase it would be positive for the USD as it shows confidence that they are doing the right things. A stop in cutting could be a big shock to the market I believe, causing a selloff in USD as it will show the Fed back-tracking on its decision in December. But this is not expected at this time.
Supports 1.3640 1.3600 1.3520 | Resistance 1.3725 1.3750 1.3820
Supports 102.85 102.50 102.00 | Resistance 103.50 103.85 104.70
Supports 1.6560 1.6530 1.6470 | Resistance 1.6625 1.6670 1.6720