News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/v6RGICQvge
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/rws9LHJV3E
  • RT @FxWestwater: Japanese Yen Forecast: JPY Crosses Eye BoJ, CPI as Haven Flows Bolster Yen Strength Link: https://www.dailyfx.com/forex/fundamental/forecast/weekly/jpy/2021/09/18/Japanese-Yen-Forecast-JPY-Crosses-Eye-BoJ-CPI-as-Haven-Flows-Bolster-Yen-Strength.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https:/…
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/FVisZuTP6M
  • Stocks appear to be in a corrective phase but could get put to the test; levels and lines to watch in the days ahead. Get your weekly equities forecast from @PaulRobinsonFX here: https://t.co/H1BaTlIHjY https://t.co/zP3mjfslSD
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/Of1thU4zXw
  • Further your forex knowledge and gain insights from our expert analysts on AUD with our free guide, available today: https://t.co/p2FhEwym1E https://t.co/MjiYB85TSF
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/fIO9TP7D62
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/Xja8DHUqlH
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/9po5Lg4vnR
FOMC Post-Mortem: Rate Liftoff Keeps US Dollar Afloat

FOMC Post-Mortem: Rate Liftoff Keeps US Dollar Afloat

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Federal Reserve raises rates for first time since June 2006.

- Fed 'dot plot' continues to see same 2016 year-end rate as in September 2015.

- See the December forex seasonality report.

In what was perhaps the most telegraphed policy change of the past decade, the Federal Reserve raised rates for the first time since 2006. But it's not what the Fed did with its current overnight rate that has everyone talking and markets moving: it's what they didn't do to their expected rate path for 2016.

Ultimately, despite downgrading its 2016 inflation forecast, the FOMC chose to maintain its expected glide path of its future policy rates (the median 2016 year-end rate was unchanged in the expected 1.25% to 1.50% range, or about four rate hikes).

Chart 1: Fed's Dot Plot - December 2015

Federal Reserve Dot Plot December 2015

Ahead of the FOMC, it was widely anticpated that the Fed would reduce its expected glide path to have it fall closer in line with market expectations. But the Fed's path of defiance instead is proving to be a veritable source of support for the US Dollar: markets are being forced to pull forward their rate hike timeline to match the Fed's expected cadence.

Short-term yields are pushing higher, but more worrisome, long-term yields are falling and thus, the US yield curve is flattening. A flattening US yield curve portends to weaker economic growth, and should the yield curve invert, it would be an extremely worrisome sign: every recession in the post-war era has been preceded by the yield curve inverting.

Read more: December Forex Seasonality Foresees Mixed US Dollar, S&P 500 Rally

Lastly, as we approach the holidays and thus less liquid markets through the end of the year, it's worth reviewing principles that help protect your capital. We call these principles the "Traits of Successful Traders."

--- Written by Christopher Vecchio, 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