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
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.