Please help regarding FOMC rate cut decision

Greetings to everyone.
I am confused about what form the EUR/USD chart will take on 18th march after the FOMC rate cut decision.When the Australian bank RBA increased its rate the chart of AUD/USD surprisingly went down.What might happen on 18th?If there is a 50bp cut rather than the expected 75bp cut are there chances of the EUR/USD chart going down?
I shall be extremely thankful if anyone kindly throws light on this query.
Regards

News gets pre-priced. Old saying... buy the rumor, sell the fact. Just like the futures market we're trading expectations more than fact. What might happen next? Nobody can reliably tell you that, because nobody really knows where price expects the rate to go.

Thank you very much.
What do you mean by ''news are pre-priced''?What is meant by ''market is already priced in the .25% hike''?Is ''being priced-in'' same as or different from ''consensus'' or ''expectations''?
Please pardon for asking so many definitions--it will be a great help for me if you give me the answers.
With warm regards
nakamura

Well, good example would be the NFP (non-farm payroll) that came out this month. There are other indicators that tend to point to what will happen, so the market started acting on those indicators. When the actual release came out the market made a sudden correction opposite of what was expected.

That's all I mean. Price sometimes factors things in ahead of schedule, sometimes it doesn't. All you can reasonably guess is that the price will change, but even then... it doesn't always. There is no holy grail. Just watch for changes leading up to the announcement, or the correction after the initial spike... both tend to be pretty trade-able IMO.

Thank you very much for clarifying the matter.
There is just one more query.Which chart has the most impact by FOMC decision--EUR/USD or GBP/USD?And is the rise/fall after the announcement proportional to the rate cut?Another thing.Will USD/JPY be affected by the FOMC decision and by what degree?
Thats all friend.
Thank you
Regards

Is anyone able to explain why cable has crashed when they interest rate was annouced?

Well the speculation goes like this... before the announcement the rate was priced in at 100pts, it came out 75pts which means that the USD is somewhat stronger than priced... thus we have an increasing strength dollar with a rather (temporarily atleast) static pound and voila... GBPUSD go down da hole.

Trading news is risky business, you can't predict direction. The only semi-effective approach is to run a news straddle, but even that carries it's own risks. When you trade news you aren't trading the release or the numbers themselves, you're trading the relative expectations of the market after the release against the expectations leading up to the release. Think "futures" not "present" ...

You'd need to be on the floor, or at least have level 2 data leading up (good luck) to have a solid guess about direction I'd imagine.

This may sound simple but I like to watch for large pennant formations building before any big news announcement.

The market had priced in 0.75%. It is the wording of the FED signalling a high risk of possible inflation; I think 2 member voted against the 0.75%. With inflation coming back to the front, growth COULD be taking second place soon. That could signal end of further rate cuts and MAYBE rates hiking in the future. Maybe !! Thus Euro and other non heavily CARRY affected pairs took the first dive.
GBP which was a stronger CARRY affected pair had more support from the DOW took only to continue the fall after Wallstreet closed. Somehow Dow helps more Gbp than Euro - probably of it's stronger CARRY trade nature.

rabib and highway, thanks for your response.

i thought they had predicted 0.75% and some people are saying 1%.

i have seen confirmation, i.e pin bars, then confirmation that the market has broken a pervious low, only for it to go in the other direction and get stopped out.

fundies are very important to me, if you do not know the status of the economic situation, then there is no way of knowing which way price is heading.

i mean real traders on a floor do not look at moving averages or MACD or stoch cross to determine if they are going to sell or buy.

what is the best resource to look at to get an understanding of how the markets work?

bloomberg, ..

hi de123,

thanks, i'll check it out...

i just read why cabled crashed...

;o)

de