SEPT FOMC Rate Decision NEWS TRADING MAP
WHAT IS EXPECTED?
HOW TO TRADE FOMC
Here’s our FOMC News trading map. Click twice to expand
Kathy Lien [11:15 AM]
We’ll also be LIVE Trading the FOMC rate decision starting 1:45pm NY Time tomorrow (15 min before). Same daily webinar link. there will STILL be a World Markets Wed webinar at 9am ET / 13 GMTBUY USDJPY TARGET 113.50
OUR VIEW = Mildly +USD
25BP HIKE &:
1. Hawkish Comments from Fed Chair Powell
2. Market Leaning Towards 1 More Hike in December
Dovish Inflation Comments
SELL USDJPY TARGET 112.00
Rate Decision Powell Speech
NY 2:00PM 2:30PM
GMT 18:00 18:30
Sydney 4:00AM 4:30AM 4:3
WHEN IS THE RELEASE?
WHAT IS EXPECTED
The market is pricing in a 100% chance of a 25bp hike by the Federal Reserve tomorrow and based on Fed Fund futures, there's a 75% chance of another hike in December. Investors don’t expect the central bank to slow down because the stock market is at a record high, the labor market is strong and so far, the impact of trade tensions has been limited. Since rate hike is a done deal and we don’t expected any major changes to the Fed’s forecasts their guidance is key. Over the past month, retail sales, inflation, housing and manufacturing activity slowed so the Fed may not be as hawkish as everyone expects.
If Fed Chairman Powell suggests that its time to slow down, the dollar could descend quickly from its highs as its doubt on December tightening. However if he is unambiguously hawkish the dollar will soar against all of the major currencies.
In the event of a dovish hike, the best currencies to trade will be USD/JPY and EUR/USD. For USD/JPY 113 would become a double top as the pair heads back below 112. The euro is attractive because ECB President Draghi thinks inflation is on the rise.
In the event of a hawkish hike, the best currencies to trade should be AUD/USD, USD/CAD and GBP/USD. The RBA has no plans to raise interest rates this year, sterling is still vulnerable to Brexit risks and its becoming increasingly clear that Canada won’t not be able to strike a trade deal with the U.S. before the September 30th deadline. The only risk for the USD/CAD trade is that President Trump plans to hold a press conference at 5pm on Wednesday. He’ll be talking about the “news of the day,” which could mean either the Canada-Mexico trade deal, Kavanaugh nomination or Rosenstein’s fate.
Powell Confirms Dec Hike
Powell Casts Doubt on Dec Hike
Last Fed Forecasts: