FOMC Interest Rate Statement

Unless the Fed does something really surprising the price almost always moves in one direction then goes back in the other direction. So as long as you keep your stops wide and don't do anything silly like buy at resistance and sell at support you are on to a winner.

So you're straddling?

Hell no, I said DON'T buy at resistance and sell at support. Fade the initial move is a good trade.

how do you know this? this is just an imaginations of past data, nobody know what will happen this time, maybe it's great move or maybe it's just whipsaw. i wish this will be good spike...

From my experience trading the news, interest rate statements to me are the most difficult to trade since the interest rate is already priced into the market. Now unless a number other than expected comes out, its hard to say which direction it will go. I'd like to stick to the trend on this one..

its not the number this time, its the contents of the statement, if its hawkish the the eur/usd will start heading down, if not then we will see new highs over the coming week.


My prediction is for a hawkish statement, and certainly no signal for a cut in rates.

Has anybody here just jumped on the candle once it forms or is this too dangerous? Do you have any ideas on how to trade the statement?

the main thing the market is looking for today is some signs of dovishness in the statement...

You can get burned jumping on candles :. It all depends what candle you jump on. Just look at the historical charts and you'll see - it goes in one direction then comes back UNLESS the Fed says something totally unexpected (highly unlikely). So just read the statement and as long as it's not unexpected just fade the initial move. Buy at support or sell at resistance.

<TABLE cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD class=newsStoryHeader width=400 colSpan=2>12-12-06 16:34 CET</TD></TR><TR><TD>http://wminvest.ldn.swissbank.com/im...eric/trans.gif</TD></TR><TR><TD class=newsStoryHeadline colSpan=2>FOREX-Dollar slides as investors worry about the Fed</TD></TR><TR><TD>http://wminvest.ldn.swissbank.com/im...eric/trans.gif</TD></TR><!--News Body starts here--><TR><TD class=newsStory width=450 colSpan=2>(Updates with comments, details, refreshes prices, adds
byline)
By Amanda Cooper
NEW YORK, Dec 12 (Reuters) - The dollar fell to the day's
lows against the euro as traders became increasingly convinced
the Federal Reserve will ditch its warning on a pick-up in U.S.
inflation at its policy meeting later on Tuesday.
Data showing the U.S. trade deficit for October shrank to
its narrowest since August 2005 had given the currency a brief
boost earlier in what had otherwise been fairly routine trading
ahead of the Fed's last meeting of the year.
The central bank is expected to leave rates at 5.25
percent, where they have been since June, and based on recent
comments from top officials including Chairman Ben Bernanke,
most investors had expected the Fed to reiterate its concern
about the upward risk to inflation.
But a combination of the euro breaking above $1.3250, a
fairly important short-term technical level, and growing
expectations that vital support for the greenback will
disappear along with the Fed's inflation warning, unleashed a
wave of broad-based dollar selling.
"Investors just don't want to go too long dollars before
the Fed meeting. And once we broke some key levels here, at
$1.3250, declines accelerated," said Gregory Salvaggio, vice
president for trading at Tempus Consulting in Washington.
"There's nothing 'fundamental' crossing the wires, no
commentary, etc. But the currency market is beginning to
speculate the Fed may hint to a shift on rates, perhaps to a
more neutral stance, later today," he said.
The euro <EUR=> hit a session high of $1.3269 according to
EBS and was last quoted at $1.3251, up 0.1 percent on the day,
according to Reuters data.
The European single currency got an extra boost from
comments from European Central Bank Governing Council Member
Vitor Constancio, who said the bank did not have a target for
the euro exchange rate.
He told Reuters at a stock market conference that abrupt
moves in the euro rate were undesirable but the currency was
only one factor in ECB decisions.
"It's another statement that the ECB is not uncomfortable
with the level of the euro and it does nothing to encourage
anyone to buy dollars, particularly against the euro," said
John McCarthy, director of foreign exchange trading at ING
Capital Markets LLC in New York.
Meanwhile, the dollar was down against the yen <JPY=> at
116.92 yen, off a session high at 117.19 yen, while the euro
was up modestly against the yen <EURJPY=> at 154.91 yen, having
hit another record high overnight on EBS at 155.05 yen.
Sterling <GBP=> continued to benefit from strong British
inflation data earlier and was up 0.5 percent at $1.9673, while
the euro <EURGBP=> was down 0.4 percent against the pound at
67.35 pence.
The U.S. dollar managed to remain in positive territory
against the Canadian dollar <CAD=> which earlier hit fresh
eight-month lows around C$1.1556 and was last quoted at
C$1.1542, up nearly 0.6 percent on the day.
</TD></TR></TBODY></TABLE>

can anybody please tell me what is "dovishness" especially in statements that merlin mentioned.

Thanks

Doves prefer low interest rates.

The move is going to be UP for the Euro.

Care to explain?

Rusty

well, the ECB just raised rates, and if the Fed doesn't raise rates or stays the same, it is good for the EUR. However, since everyone is expecting no change and cut rates next quarter, the price is already factored in. The main thing to look for here is the content of the meeting and definitely any clues to what Fed may do next.

Aren't brokers looking to close the books for 2006? We can see some sparks here....

This is the key paragraph to watch out for (from last month's meeting):

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

If they don't change this paragraph at all, it will be very positive for the dollar. If they drop the phrase "some inflation risks remain" this will be very negative for the dollar. Anything else will be mixed so you can go ahead and fade the initial move.

Thanks
Rusty

is there a site where we can see the text copy of the minutes?

i will post the text here as soon as released. you can also get it yourself at http://www.federalreserve.gov/fomc/#calendars.

REMEMBER this statement can come a few minutes early or late. stay alert

good luck everyone!