FOMC Lead Up: The Sounds of Silence | Vantage FX

FOMC Lead Up: The Sounds of Silence

December 15, 2015

FOMC Lead Up: The Sounds of Silence:
Can you hear that? That is the sound of silence, with quiet market action expected as we lead into Thursday morning’s FOMC decision. All I can say is enjoy the peace while it lasts!

With only 2 and a bit more days left before the Fed finally pushes the button on an interest rate liftoff, any strong directional moves in the US Dollar seem to have already been played out. Barring any market thinning as traders uninterested in a volatility play in the last calendar month of the year take their money to the sidelines, the squeeze has played out and we are going to head into FOMC with value in a move either way pending just how hawkish Yellen sounds.

EUR/USD Daily:

Click on chart to see a larger view.

With all the talk now about the USD selling off on the expected dovish tone accompanying Thursday’s hike, the fact that price isn’t sitting on its lows in any of the majors (highlighted by the EUR/USD daily chart above), sets us up nicely for the possibility of now a hawkish surprise. I personally can’t see the Fed doing anything but coming across as the whitest of doves, dropping the words gradual, data dependent and intermittent wherever they can, but the charts definitely offer opportunity if you like playing the contrarian.

Remember China?:
Searching through the crowded Vantage FX Forex News Centre, I frustratingly can’t find our analysis following the September FOMC decision before my deadline, but if you remember, the reason they didn’t move in September when everyone was expecting them to, was global concerns mostly focused around China. The US data was there even back then but the Fed chose to take a wait and see approach to global conditions.

With emerging market economies back in the headlines, I just wanted to leave this point here. It is something that must be considered when you are drawing up your trading scenarios post FOMC.

“Ninety percent of economists in a recent Reuters poll predicted the federal funds rate would be raised by quarter of a percent point on Dec. 16, taking it to 0.25-0.5 percent.”

“The same poll saw a very gradual pace of subsequent increases, with the rate rising to between 1 and 1.25 percent by the end of next year and to 2.25 percent by end-2017.”


On the Calendar Tuesday:
AUD Monetary Policy Meeting Minutes

EUR German ZEW Economic Sentiment

CAD Manufacturing Sales m/m
USD Core CPI m/m


Chart of the Day:
I’ve read a few headlines and market notes highlighting last night’s bounce in the price of oil and whether this could signal some sort of bottom. Today’s chart of the day takes a look at a few charts and what market sentiment could mean for Commodity traders heading forward.

OIL 4 Hourly:

Click on chart to see a larger view.

First of all we take a look at the 4 hour chart, showing yesterday’s reportedly strong rally off lows. Strong rally off lows? It was ONE 4 hour, counter-trend candle that flew straight into resistance!

Come on guys…

OIL Daily:

Click on chart to see a larger view.

I included the daily chart here to highlight the major bearish trend line that price has tucked back in below, also showing the strong daily rally from a longer time frame view.

With short oil an already very crowded trade, taking a contrarian view does have its merit, but calling lows off these charts isn’t something I’m jumping out of my skin to do. Do you see opportunity buying oil?

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by regulated Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the Forex account of the reader. We always aim for maximum accuracy and timeliness, and secure Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.




Fast & Easy Account Opening Start Now!

  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!
Forex Promotions

Open a live account today to gain exclusive access to our 8 Forex Promotions. 

Find out more.