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Trading FOMC minutes

  • #1
  • First Post: Oct 11, 2006 3:55am Oct 11, 2006 3:55am
What is the best news trading strategy for this, as there is a lot of 2-way action usually. Any ideas?
Forex rules
  • #2
  • Oct 11, 2006 10:16am Oct 11, 2006 10:16am
From last Friday Usd has gain against all four major currencies. If in FOMC minutes there some hawkish comments about interest rates, USD should go up about 50 pips. If within five minutes after release USD go in same direction I will add USD further in my portfolio.
These too shall pass away.
  • #3
  • Oct 11, 2006 10:35am Oct 11, 2006 10:35am
I don't expect much in the way of hawkish comments/tone from the FOMC minutes. Fed raises are done for the next few months. Expect a rate reduction in early 2007.Today, I'd expect continued dollar strength (Eur/USD down nearly 200 pips from a week ago for example).
  • #4
  • Oct 11, 2006 11:48am Oct 11, 2006 11:48am
Where's the best place to view this... the federalreserve.gov website? How about the Lackner speech at 1:30... is there a place to view that in "real time."
  • #5
  • Oct 11, 2006 11:59am Oct 11, 2006 11:59am
Quote from Newstraderfx from other thread

"We've seen a bit of consolidation in the GBP in the London session this A.M. We could yet see a move down in the GBP as traders may buy into a Hawkish FOMC report, but I think there is significance in the fact that traders apparently are holding their positions so far in the face of an important release.

I think a sustained break above 8600 will indicate that a serious sell off of positions is occuring prior to the FOMC minutes. It could run 50-60 pips above that if traders lose their stomach for holding profitable positions in the middle of a release. If the GBP holds below 8600, it will indicate that traders are confidant that the minutes will be hawkish and that their $ long positions will get even more profitable.

If you're interested in trading the FOMC minutes you'll need to watch the pair all morning. Based on the above, you'll know how traders who are already in the market stand. If you want to go with them, take a short position in the GBP prior to the FOMC release only if the pair is 8580 or lower. If it's gone into the mid 8600's stay away. Anything higher then the mid 8600's may be evidence that traders are selling their long positions into the rumor of a dovish release, but this is more risky in my opinion. Personally, i'm hoping to see it sitting right where it is now-8580."
These too shall pass away.
  • #6
  • Oct 11, 2006 12:03pm Oct 11, 2006 12:03pm
Not trying to get off topic on how to trade this or anything, but this is a record of a 2 week old meeting correct? How does that not "leak"? Forgive my lack of knowledge on fundamentals.
  • #7
  • Oct 11, 2006 12:10pm Oct 11, 2006 12:10pm
Quoting fspirani
Quote from Newstraderfx from other thread

"We've seen a bit of consolidation in the GBP in the London session this A.M. We could yet see a move down in the GBP as traders may buy into a Hawkish FOMC report, but I think there is significance in the fact that traders apparently are holding their positions so far in the face of an important release.

I think a sustained break above 8600 will indicate that a serious sell off of positions is occuring prior to the FOMC minutes. It could run 50-60 pips above that if traders lose their stomach for holding profitable positions in the middle of a release. If the GBP holds below 8600, it will indicate that traders are confidant that the minutes will be hawkish and that their $ long positions will get even more profitable.

If you're interested in trading the FOMC minutes you'll need to watch the pair all morning. Based on the above, you'll know how traders who are already in the market stand. If you want to go with them, take a short position in the GBP prior to the FOMC release only if the pair is 8580 or lower. If it's gone into the mid 8600's stay away. Anything higher then the mid 8600's may be evidence that traders are selling their long positions into the rumor of a dovish release, but this is more risky in my opinion. Personally, i'm hoping to see it sitting right where it is now-8580."
Forgive the "newbie" question, but I'm confused with your "short and long" statements. Are you stating that if the GBP/USD is in the 8580 range, that there would be an expectation for dollar strength and thus a price drop towards the daily open at 8541?

And if the price rises, prior to the announcement, above the mid-8600's, then you would expect a weakened dollar after the announcement and the price to rise?
  • #8
  • Oct 11, 2006 12:19pm Oct 11, 2006 12:19pm
I'm thinking that only a "bonehead" would establish any position prior to the announcement.

From Newstraderfx: take a short position in the GBP prior to the FOMC release only if the pair is 8580 or lower.
Trade what you see - Not what you think
  • #9
  • Oct 11, 2006 12:21pm Oct 11, 2006 12:21pm
I would defintely not trade any USD backed pair for at least 15 minutes. These types of fundamental news is the trickiest to trade since you don't have a number that comes out that people react to. Since it is a report there could be a hawkish comment at the beginning and traders get in one direction then as they keep analyzing the report they may see that the fed was trying to say something else and price reverses. I have seen this many times with these types of reports so unless you have a strategy in place I would stay away for 15+ minutes while traders digest the information.
  • #10
  • Oct 11, 2006 12:23pm Oct 11, 2006 12:23pm
This is how Newstraderfx explained himself after the NFP.


"Nothing to explain here-my opinion was wrong. I'm not blaming that on anything but my own inexperience. Looking back at all the info, there was nothing about revisions to the prior number being released at the same time and no explanation of what a revision could mean. Maybe I missed it-but did you post that anywhere?"
Trade what you see - Not what you think
  • #11
  • Oct 11, 2006 12:24pm Oct 11, 2006 12:24pm
He's saying that there is not much of a good reason to enter a short on the pair (sell GBPUSD) if it has run up to the mid 8600s prior to FOMC release time.

Again, the rationale is that dollar strength could become been undermined if people already in the market decide to take profits rather than stick it out.

We havn't seen 8590 broken yet this am, and current price is 8570. All of which I interpret as positive for my decision to remain short on the EURUSD from overnight.

Hope that helps
  • #12
  • Oct 11, 2006 12:32pm Oct 11, 2006 12:32pm
Quoting SKW322
He's saying that there is not much of a good reason to enter a short on the pair (sell GBPUSD) if it has run up to the mid 8600s prior to FOMC release time.

Again, the rationale is that dollar strength could become been undermined if people already in the market decide to take profits rather than stick it out.

We havn't seen 8590 broken yet this am, and current price is 8570. All of which I interpret as positive for my decision to remain short on the EURUSD from overnight.

Hope that helps
Thanks, I appreciate the confirmation. I would assume that this "announcement" is different than others in that the actual annoucement has already happened prior. This is just an indication of the reasons behind the announcement, correct?
  • #13
  • Oct 11, 2006 12:35pm Oct 11, 2006 12:35pm
I'd of thought we'd of heard from the "King" or Merlin on this topic with less than 20 minutes to go?

I'm with you, and hope you are correct Money Master. Sitting with shorts on GBP and EUR vs USD, sitting at slight loses....
  • #14
  • Oct 11, 2006 12:45pm Oct 11, 2006 12:45pm
Reminder: on 9/20 left rates at 5.25%, on a 10-1 vote. Richmond Fed President Lacker was the only dissenter, preferring a 25bps increase. At the time of the decision the FOMC said the following:

- additional firming depends on the data
- core inflation readings have been elevated
- inflation expectations are contained
- housing market is cooling
- economic growth moderation appears to be continuing
  • #15
  • Oct 11, 2006 12:51pm Oct 11, 2006 12:51pm
Quoting learningtheropes
I'd of thought we'd of heard from the "King" or Merlin on this topic with less than 20 minutes to go?
haha you know im here! i wouldnt miss this one! just been a little busy preparing my thoughts on this one.

basically, im now officially a dollar bull, so i am looking for confirmation on that from the price action.
Relax and be happy.
  • #16
  • Oct 11, 2006 12:52pm Oct 11, 2006 12:52pm
and here they are...

http://www.federalreserve.gov/fomc/minutes/20060920.htm
Relax and be happy.
  • #17
  • Oct 11, 2006 12:53pm Oct 11, 2006 12:53pm
Quoting merlin
haha you know im here! i wouldnt miss this one! just been a little busy preparing my thoughts on this one.

basically, im now officially a dollar bull, so i am looking for confirmation on that from the price action.
go merlin!!!!!!!
  • #18
  • Oct 11, 2006 12:56pm Oct 11, 2006 12:56pm
basically the minutes read dollar bearish to me, but these things are hard to read. information overload!

most intersting is lacker gives same reason for dissenting ...

Mr. Lacker dissented because he believed that further tightening was needed to bring inflation down more rapidly than would be the case if the policy rate were kept unchanged. Recent data indicated that inflation remained above levels consistent with price stability. Moreover, the upswing in compensation and unit labor costs in the first half of the year indicated that inflation risks were tilted to the upside. Although real growth was likely to be moderate in coming quarters, in his view it was unlikely to be slow enough to bring core inflation down.
Relax and be happy.
  • #19
  • Oct 11, 2006 12:57pm Oct 11, 2006 12:57pm
wow look at this dollar strength. sombody just hit a BIG bid
Relax and be happy.
  • #20
  • Oct 11, 2006 12:57pm Oct 11, 2006 12:57pm
Quoting learningtheropes
I'd of thought we'd of heard from the "King" or Merlin on this topic with less than 20 minutes to go?

I'm with you, and hope you are correct Money Master. Sitting with shorts on GBP and EUR vs USD, sitting at slight loses....
$1200 in my account says that short on GBP/USD was a correct call for the FOMC.
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