FOMC Keeps Rates Unchanged, Markets Snore

June 16, 2016

No surprises overnight, with the US Federal Reserve keeping interest rates unchanged as expected.

The Fed has however continued down the path that they are still looking to raise interest rates twice this calendar year. Something that markets aren’t taking their word on just yet…

“The pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up.”

In the accompanying statement, they spoke about their expectations that the labour market is expected to strengthen after the most recent horrible NFP prints (one swallow does not a summer make…), but did lower their economic growth forecasts for both 2016 and 2017.

The takeaway is that the Fed is still on the same path that they have been, but for traders long USD, the risks around further poor data releases are massive.

If you’re really keen, check out the full FOMC Statement from the Federal Reserve here, as well as the FOMC projections including the following ‘dot plot’ here too.

June FOMC dot plot

Onto the charts and really we don’t have too much to talk about following the release.

EUR/USD Daily:
Click on chart to see a larger view.

So with the muted reaction to the Fed keeping interest rates on hold for another month, my ‘famous last words‘ at the bottom of yesterday’s blog didn’t come back to bite me after all. Markets got exactly what they were expecting, and most importantly for traders, exactly what they had priced in.

Back at the start of the month in our Yellen Kisses June and July Goodbye blog, we were following the above channel with the bottom line (green x’s) drawn from the bottom and the most obvious first swing. This ignores the news spike that pushed below it and as you can see from the most recent price action, the level has been respected nicely.

Chart of the Day:
I’ve been talking up the potential of being bullish AUD/USD for a while now, and the Fed again gave us another gem setup to potentially add to longs.

AUD/USD 4 Hour:
Click on chart to see a larger view.

The area marked on this chart is exactly the same as the type of areas on that first blog. Just simply another area of consolidation that price pulled back into and kicked back out of on the back of the FOMC release. Pick your areas of interest and manage your risk around them.

If you got on board early, we’d love to see some screenshots (mention @VantageFX on Twitter) of the swap you’ve been collecting on the way. Who says you can’t actually make money collecting swap!


On the Calendar Thursday:
Brace yourselves…


CAD BOC Gov Poloz Speaks
AUD Employment Change
AUD Unemployment Rate
AUD RBA Deputy Gov Lowe Speaks
JPY Monetary Policy Statement
JPY BOJ Press Conference

CHF Libor Rate
CHF SNB Monetary Policy Assessment
CHF SNB Press Conference
GBP Retail Sales m/m
GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate

USD Core CPI m/m
USD Philly Fed Manufacturing Index
USD Unemployment Claims

Make the switch to true ECN Forex Broker Vantage FX today!

Dane Williams – @VantageFX

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