USD Sees Mixed Trading Ahead of FOMC Statement
August 12th, 2009 Posted in Daily Forex News
Central Bank statements will be the dominant force in today’s trading, with the most influential being the FOMC meeting. Since these provide an outlook on the economy as well as discuss current conditions, central bank statements tend to have great influence on the currencies since they provide clues as to future monetary policy moves.
USD – FOMC statement 18:15 GMT
- A statement in which the Federal Reserve communicates to the public and investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions and most importantly the outlook for the US economy.
- No interest rate changes are expected, however, the importance of this statement lies in what the Fed decides regarding the future of its quantitative easing program as well as its outlook as to the strength of the US economy.
GBP- BOE Governor King Speaking/Inflation Statement 9:30 GMT
- It provides valuable insight into the bank’s view of economic conditions and inflation. Inflation is one of the key factors that will shape the future of monetary policy and influence their interest rate decisions
- Higher inflation may signal the need to raise interest rates as this is the most common means of combating inflation. This is likely to cause appreciation of the currency as higher interest rates makes the currency more attractive
- Lower inflation figures will likely cause a depreciation of the currency as it might prompt deflation fears.
Crude Oil – U.S Crude Oil Inventories
- While it looks like the global recession is coming to an end, oil demand is still lagging.
- Any less than bullish results (meaning if inventories rise as expected) will likely put further pressure on Oil prices, pushing them lower
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Tags: FOMC meeting, interest rates, USD Trading
