Interpereting FOMC reports

I'm still trying to learn how to interperet reports in relation to the market. Regarding tomorrow's FOMC report, previious number was 4.75% and forecast is 5%. Does this mean that they expect the DOLLAR to be stronger or weaker? I will not be home when the report is released and I want to place a order ahead of time. But I just need to know what to expect.

thanks much guys

changing the current interest rate to 5% will not affect the market because everybody expect that. The statement from FOMC about policy on future rate hike will have a great effect on the price.

You need to be very careful when you trade before the release of report. If the fomc report says it is increases int rate by 25 bp. Then dollar sell-off MIGHT (momentum is strong) continue as the market has already priced in that.

It is the unexpected stuff which will cause the market to move like crazy.

Like if it says it is done tightening , then you can see huge dollar sell-off. but if it says there could be more tightening then we might see a dollar rally.(it= FOMC )

In my opinion (remember it is just an opinion)

The inflation reports and data released show that we might be in for more increases.

Actuaully, the rate increase is more or less a given....it's the language they use regarding their future stance against inflation that often generates a sell off or buy in.

Take the CAD interest rate decision a few weeks back....it should have been in favor of a stronger CAD, yet it suffered a huge sell off after the release!

The language suggested a weakening inflationary standing thus suggesting the CAD would lose value over time.

We used to be influenced by the rate hike itself, within the last two years, we seem more concerned about the general tone of the rate statement rather than the rate itself. Is it dovish or hawkish....di they use the word "pause"? or use the word "aggressive"?

That's the market baby!

The main focus will be on the language in the accompanying statement. Look for small changes aimed at providing a somewhat greater degree of policy flexibility going forward.

For example, in its March 28 policy statement, the FOMC said it believed that "some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance."

The indication that “some further policy firming may be needed” could be altered to “may or may not be needed” which would essentially mean to expect a pause at their June FOMC meeting.

The Fed could also remove the phrase entirely but I doubt that they would do such a thing as this will cause a huge ruckus in the market and the dollar would plummet into Hades.

The expectation going into tomorrow's Fed announcement is that they're going to indicate a pause. If Big Ben and his crew fails to drop such an indication and instead decides to spew out aggressive language about rising inflationary pressures and the continuing need to combat them, the market’s reaction would be similar to seeing a ghost, and we could see the dollar surge as traders who were short the dollar panic to get out of their positions.

It seems that the market is expecting the Fed language to be tame tomorrow. Most of this may already be priced in the buck.

What will move the markets is if there is:

 

1. Dovish comments that say “we are definitely going to pause next month and more” (dollar will drop)
2. Hawkish comments that say “pausing is for sissies, we are hardcore inflation fighters, and we think there is still a lot more inflation to fight” (dollar will rise).

Could tomorrow’s FOMC meeting be the catalyst for a dollar rally? Are there too many traders on the sell side of the dollar?

There is also the twice yearly currency manipulation report out of US treasury today at 2000 GMT. It could impact the market if it surprises.

in my opinion, Fed will be neutral today with not so dovish, not so hawkish comments, and that will still be in euros favour as (in my opinion again) dollar is going to go down and further down....everything points there, what with the trade deficit , with geopolitical concerns, with high oil, huricane season coming soon, there is NOT a single event that is favour dollar...so unless the statement tonight be very hawkish saying they are not done with hikes and also on Friday we see a better trade deficit than expected(highly unlikely) then Euro is the king for now and definately will break all resistance and head for 1.30 (which is only 200 pips away...)


so about tonight, unless hawkish statement is in tact then all other events will only lead to euro rally ....

the key to interpreting the FOMC statement is to read the previous statement, then compare the language change to the new one.

all fed statements can be found here...
http://www.federalreserve.gov/fomc/#calendars (click on "statement" links)

at about 2:15pm, refresh the page and the new statement will show up.

Ah ha there is another one for my file... as in the video... I'll be watching you...
LOL thanks a lot, Scott

the charts have already interpreted fomc for you.donot waste your time doing it allover again .