Fed Funds Rate Release
September 21st, 2009 Posted in In-Depth Analysis
This Wednesday we should have the market mover that should be the highlight for this week’s trading; the Fed Funds Rate and the accompanying Federal Open Market Committee Statement (FOMC). With equities and the Euro at their yearly highs, the statement could make or break the bullish streaks.
Last week, Federal Reserve Board Chairman Ben Bernanke claimed that the recession had come to an end. Now market participants will attempt to predict the remarks written by the FOMC. The economy has begun to pick up steam from the recessionary period. However, inflation is virtually non existent in the American economy; the committee is widely expected to hold interest rates at their near 0% level. But traders will be attempting to gauge just when the FOMC will begin raising rates to fend off future inflation due to the previous monetary policy moves used to guide the economy through the financial crisis.
Just when this monetary policy tightening will be implemented is still up for debate. When this tightening occurs, it could spell bad news for EUR/USD bulls. The currency pair has been tracking equities during the recent rally as the pair has climbed to its yearly high of 1.4766. A sign that the FOMC will begin to tighten rates in an attempt to fend off future inflationary pressures will be a negative for equity markets and as such; a negative for the EUR/USD.
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Tags: dollar, Euro, Fed Funds Rate, FOMC, FOMC meeting, Forex Trading
