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Daily Financial Market News

Wed, 20 Sep 2017 11:38:00 GMT

Preview for September FOMC Decision & Outlook for USD-pairs

Preview for September FOMC Decision & Outlook for USD-pairs Menu    Search DailyFX Home   Rates   Charts Market News        Real-Time News Daily Briefings Forecast Market Alerts DailyFX Authors Articles Technical Analysis        Analyst Picks Support & Resistance Daily Technical Reports Pivot Points Sentiment Articles Algorithmic Trading Calendars        Economic Calendar Webinar Calendar Central Bank Rates Dividend Calendar Education Beginner Intermediate Advanced Expert Free Trading Guides DAILYFX PLUS Toggle navigation News News   Market News Real-Time News Daily Briefings Forecast Market Alerts DailyFX Authors Articles Market News Headlines Strong Canada Consumer Price Index (CPI) to Cap USD/CAD Rebound Bitcoin Prices Under Pressure- Time to Buy? AUD/USD Range Snaps Following FOMC; RBA Tames Bets for 2017 Rate Hike Technical  Analysis Analysis   Technical Analysis Analyst Picks Support & Resistance Daily Technical Reports Pivot Points Sentiment Articles Algorithmic Trading Technical Analysis Headlines Japanese Yen Technical Analysis: Year’s Lows Creep Back Into Focus GBP/USD Approaches Important Long Term Price Zone S&P 500 Bulls Undeterred by Hawkish Fed; Eyes on Slope Resistance Calendars Calendar   Economic Calendar Webinars Calendar Central Bank Rates Dividend Calendar Forex Economic Calendar Time Event Actual Forecast Rates   Charts   Education Edu   Education Beginner Intermediate Advanced Expert Free Trading Guides DAILYFX PLUS DFX+    Search × Get the best parts of DailyFX.com in the new DailyFX App Download × Join Us For Our Free Webinars Get daily market analysis from our in-house experts Choose from more than 25 webinars each week Put your questions to our experts in real-time Q&As Register now Want to hold off on improving your trading? Click here to dismiss. × Get Your Free Trading Guides With your broad range of free expert guides, you'll explore: The basics of forex trading and how to develop your startegy Foundational knowledge to help you develop an edge in the market What's ahead for major FX pairs, Gold, Oil and more Download a Free Guide Want to hold off on improving your trading? Click here to dismiss. EUR/USD EUR/USD Low ------ High ------ View More Note: Low and High figures are for the trading day. News Post FOMC, BoJ Price Action Setups (Sept. 21, 2017) EUR/USD Steady as Draghi Avoids Mention of Monetary Policy FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed GBP/USD GBP/USD Low ------ High ------ View More Note: Low and High figures are for the trading day. News GBP Coiled Ahead of Make-or-Break Brexit Speech SPX Wavers but Holds, VIX Below 10, Pound Ready for Volatility It’s Prime Minister May’s Turn to Charge or Sink GBP/USD USD/JPY USD/JPY Low ------ High ------ View More Note: Low and High figures are for the trading day. News Japanese Yen Technical Analysis: Year’s Lows Creep Back Into Focus USD/JPY Trend: Is This a Long Term Bottom? Post FOMC, BoJ Price Action Setups (Sept. 21, 2017) Gold Gold Low ------ High ------ View More Note: Low and High figures are for the trading day. News DailyFX Morning Digest: US Dollar Getting Much Needed Lift from FOMC US Dollar Bottoming Process May Finally Be Starting Crude Oil Price Hit 4-Month High, Gold Drops on FOMC Outcome Oil Oil Low ------ High ------ View More Note: Low and High figures are for the trading day. News Crude Oil Price Hit 4-Month High, Gold Drops on FOMC Outcome Gold Price Drop May Resume on Steady FOMC Policy Outlook Crude Oil Prices Remain Bid as Iraq Hints at More OPEC Measures BITCOIN BITCOIN Low ------ High ------ View More Note: Low and High figures are for the trading day. News Bitcoin Prices Under Pressure- Time to Buy? Near-term Setups in EUR/USD, Bitcoin & Ethereum Pound Surges, Bitcoin Plummets Ahead of Pivotal FOMC Meeting View More   More Real-Time News Facebook Twitter Youtube Google + Preview for September FOMC Decision & Outlook for USD-pairs by  Christopher Vecchio, Sr. Currency Strategist  News events, market reactions, and macro trends. Connect via: Talking Points: - Low volatility persisting across USD-pairs ahead of FOMC meeting; DXY Index continues its drift lower away from its daily 21-EMA. - Key feature of today's FOMC rate decision will be whether or not the balance sheet normalization process commencement is announced; if so, the US Dollar may find some desperately needed support. - See our Q3'17 forecasts for the British Pound, Euro, US Dollar, and more. Upcoming Webinars for Week of September 17 to September 22, 2017 Wednesday at 13:45 EDT/17:45 GMT: Live Data Coverage: FOMC Rate Decision with Chief Strategist John Kicklighter Thursday at 07:30 EDT/11:30 GMT: Central Bank Weekly: FOMC Post-Mortem, BOJ Preview See the full DailyFX Webinar Calendar for other upcoming strategy sessions The most important event of the week for the US Dollar - and all of FX markets - comes today when the Federal Reserve meets for its September policy meeting, one of the four meetings per year that produces a new summary of economic projections (SEPs) containing the infamous 'dot plot,' as well as a press conference from Fed Chair Janet Yellen. As it were, the Fed, like the ECB, BOE, and RBNZ, in an effort to become transparent, has become predictable: they will only make a major policy change (i.e., hike rates) with justification in hand and an opportunity for Chair Yellen to explain to markets why they made their decision.Today's meeting will not bring a rate hike, however. Fed funds futures are pricing in exactly a 0% chance of a 25-bps rate hike after all. Accordingly, whether or not the Fed uses this meeting to announce the implementation of their balance sheet normalization strategy, which was outlined at the June meeting in the “Policy Normalization Principles and Plans” augmentation. The Fed intends to wind down its balance sheet with an initial reinvestment cap for US Treasuries at“$6 billion per month initially, and will increase in steps of $6 billion at three-month intervals over 12-months, until it reaches $30 billion per month.For payments of principal that the Federal Reserve receives from its holdings of agency debt and mortgage-backed securities, the Committee anticipates that the cap will be $4 billion per month initially and will increase in steps of $4 billion at three-month intervals over 12 months until it reaches $20 billion per month.”Effectively 'quantitative tightening,' the balance sheet unwind will be the withdrawal of stimulus from the US economy. Given the underlying instruments - Treasuries and agency mortgage-backed securities - it would appear that a balance sheet unwind announcement should help buoy long-end US yields. In turn, widening interest rate differentials and a steeper yield curve, over time, should help the US Dollar stabilize and break its 2017 downtrend.Should the Federal Reserve’s September policy statement reveal the beginning of the normalization process and a reaffirmation of the desire to raise rates by the end of the year (in say, December), perhaps market participants will be forced to confront the divergence between what the Fed is saying it wants to do and the much more dovish interpretation that the market currently holds. If so, the US Dollar may just finally find a reprieve after its latest swing lower. Ahead of the FOMC meeting, it's still too soon to say that a low is in place for the US Dollar on a broad basis. The DXY Index tested its daily 21-EMA last week, only to fail to close above it; it hasn't closed above its daily 21-EMA since June 22. Aside from the daily 21-EMA (now at 92.28), traders may want to wait for further confirmation for a DXY Index low until the August 25 bearish outside engulfing bar is cleared out at 93.44. See the above video for a technical review of the DXY Index, EUR/USD, GBP/USD, USD/JPY, AUD/USD, Gold, and US yields. Read more: USD Eyes Storm on Horizon with FOMC Meeting Tomorrow --- Written by Christopher Vecchio, CFA, Senior Currency Strategist To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com Follow him on Twitter at @CVecchioFX To be added to Christopher's e-mail distribution list, please fill out this form DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. DISCLOSURES Related Articles Previous Articles From top fx headlines Related Prev Articles   Strong Canada Consumer Price Index (CPI) to Cap USD/CAD Rebound   Bitcoin Prices Under Pressure- Time to Buy?   AUD/USD Range Snaps Following FOMC; RBA Tames Bets for 2017 Rate Hike   FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed   US Dollar Bottoming Process May Finally Be Starting   USD Eyes Storm on Horizon with FOMC Meeting Tomorrow   GBP Riding Rising Rate Expectations; USD Hasn’t Bottomed Yet   Why Does the US Dollar Want Stocks to Go Higher?   Bump in Risk Appetite Helping US Dollar Regain Footing   US Dollar Downtrend Persisting for One Major Reason Advertisement Upcoming Events Economic Event Importance Actual - Forecast - Previous Importance Actual - Forecast - Previous Forex Economic Calendar A:  Actual   F:  Forecast     P:  Previous

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