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.

Free Trading Guides
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
Oil - US Crude
More View more

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • #DidYouKnow traders generally prefer using candlestick charts for day-trading because they offer an enjoyable visual perception of price. Find out how you can utilize it in your trading strategy here: https://t.co/yFn12QgmxO https://t.co/QyHKRJOhDW
  • En español: ¿Qué trayectoria tomará el tipo de cambio del $EURUSD tras los anuncios de política monetaria del Banco Central Europeo y la Reserva Federal? #trading #forex #euro #EURUSD https://t.co/X1nRprTTRU https://t.co/5ZRMRpkro3
  • How can traders avoid #FOMOintrading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 https://t.co/eKVhbAGd4C
  • The $NZD has slumped back toward support at four-year lows as sellers retake control of price action after a punchy but brief corrective recovery. Get your market update from @IlyaSpivak here: https://t.co/72JZNVKUy4 https://t.co/e8ygfe6gGf
  • Part of trading is losing, that’s just a fact that everyone must accept straight away, How can #FOMO create hurdles in the process? Find out from @PaulRobinsonFX here: https://t.co/MwChGXI42z https://t.co/slj8Xr0dxH
  • #USDollar May Rise if US #GDP Data, #TradeWar Risks Spook Markets https://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2019/09/21/US-Dollar-May-Rise-if-US-GDP-Data-Trade-War-Risks-Spook-Markets.html
  • Asia #FX markets will be closely watching for developments in the ongoing China-led RCEP trade negotiations against the backdrop of slower global growth and rising protectionism. Get your market update from @ZabelinDimitri here: https://t.co/HZ8Loqj3Ey https://t.co/g332JcY549
  • What are trading journals? How can you create one and reduce your #FOMOintrading? Find out: https://t.co/0akgWbyJEw https://t.co/Xyy7rxZHip
  • 💷 $GBP British Pound Weekly Technical Outlook My latest take on Sterling price action as #Brexit risk comes back into scope. Commentary on the charts and implied volatility table included. More via @DailyFX ➡️ https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/09/21/gbp-to-usd-price-analysis-british-pound-eyes-rise-in-brexit-risk.html https://t.co/Hd6LAurfqG
  • The Singapore Dollar is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the $SGD and how to trade it from @ddubrovskyFX here: https://t.co/eWLM9XZs5Y https://t.co/SCHhCQhlFV
USD/JPY Dives Post-BOJ; Preview for September FOMC Meeting

USD/JPY Dives Post-BOJ; Preview for September FOMC Meeting

2016-09-21 12:18:00
Christopher Vecchio, CFA, Sr. Currency Strategist

Talking Points:

- BOJ refrains from major easing, only small technical adjustments.

- USD/JPY reverses quickly ahead of FOMC later today.

- FX volatility set to remain high with FOMC and Brexit vote next two weeks - it's the right time to review risk management principles to protect your capital.

Here we go again: What once was a much heralded and anticipated rate decision, the September FOMC meeting seems all but wrapped up at this point. The Federal Reserve will keep its main rate on hold at 0.25-0.50%, citing near-term, weak economic developments, yet insisting that enough progress has been made to warrant a rate hike at one of the upcoming meetings (hint: December, when the next SEPs are released). The key for the US Dollar today, however, is to what degree of confidence the FOMC has in the US economy, or simply, 'how quickly does the Fed think it will be able to raise rates next?'

Certainly, market participants are looking around and don't see much to be excited about. As a gauge of long-term growth and inflation expectations, the US Treasury yield curve has flattened significantly over the past year. The evolution of US economic data over the past several months has, in investors' minds, reduced the potential for substantially higher interest rates in the long-run. If the US economy is close to moving to a recession, look for the yield curve to invert (2s10s spread) - an inversion preceded each of the last seven US recessions (every recession in the post-war era).

In December 2015, we pointed out the US yield curve was already starting to flatten out, which was the bond market's way of saying that long-term growth expectations weren't looking so hot. In turn, as this flattening has continued, market participants have reduced expectations for the Fed to tighten policy further (an expanded interpretation is that the Fed's insistence on raising rates despite the obvious shortcomings in the economy may significantly reduce the economy's long-run growth potential).

After the past few weeks of US economic data (US Citi Economic Surprise Index down from +43.1 on July 26 to +3 through yesterday), markets are only pricing in a 20% chance of a hike today, and a 55% chance of a hike by December. Over the past 20 years, the Fed has never raised rates unless the market has been pricing in the chance of a hike in excess of 60%, so in actuality, rate expectations are completely muted for today and are sitting on the fence for 2016.

This is the main source of risk for markets today. Should the FOMC choose to be headstrong and tear down conventional wisdom - a small possibility with two prime dealers coming out and calling for a rate hike - global markets will be shocked. But assuming the Fed plays it safe as it usually does, a lack of a rate hike may not hurt the US Dollar significantly. By suggesting that a rate hike is still "on the table" in the near-term, and by laying out an interest rate glide path for next year calling for multiple rate hikes, then the Fed could help insulate the US Dollar, plain and simple. It's starting to feel like a September-December 2015 redux.

See the video (above) for technical considerations in EUR/USD, GBP/USD, USD/JPY, AUD/USD, and the USDOLLAR Index.

Read more: US Dollar Off Day Before FOMC as Atlanta Fed GDPNow Forecast Falls

--- 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

provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.