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.

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
EUR/USD
Mixed
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
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
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The British Pound may fall if EU and UK negotiators fail to reach a consensus as the December 31 deadline nears. The third presidential debate is on deck, how might markets react? Find out from @ZabelinDimitri here:https://t.co/kDSYzBDA3t https://t.co/7bZVhygGzW
  • 6 out of 9 Dow Jones sectors closed in the green, with 73% of the index’s constituents ending higher on Thursday. Energy (+3.57%), financials (+1.99%) and industrials (+1.93%) were leading, whereas information technology (-0.52%) and consumer staples -0.49%) were lagging. https://t.co/ClzN5LtWLG
  • The Dow Jones, S&P 500 and AUD/USD could be at risk of extending losses as retail investors increase upside exposure. What are key technical levels to watch for? Find out from @ddubrovskyFX here:https://t.co/ivQmFUTGdU https://t.co/aTLUtE6OaE
  • 🇯🇵 Inflation Rate Ex-Food and Energy YoY (SEP) Actual: 0.0% Previous: -0.1% https://www.dailyfx.com/economic-calendar#2020-10-22
  • 🇯🇵 Inflation Rate YoY (SEP) Actual: 0.0% Previous: 0.2% https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heading into the final US Presidential debate with a market that seems to be distinctly focused on the November 3rd election - or its implications including a US stimulus deal potential - two-thirds of people in my poll don't think it will factor into heavy Friday volatility: https://t.co/dArCxCWwAn
  • 🇯🇵 Core Inflation Rate YoY (SEP) Actual: -0.3% Expected: -0.4% Previous: -0.4% https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heads Up:🇯🇵 Inflation Rate Ex-Food and Energy YoY (SEP) due at 23:30 GMT (15min) Previous: -0.1% https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heads Up:🇯🇵 Core Inflation Rate YoY (SEP) due at 23:30 GMT (15min) Expected: -0.4% Previous: -0.4% https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heads Up:🇯🇵 Inflation Rate YoY (SEP) due at 23:30 GMT (15min) Previous: 0.2% https://www.dailyfx.com/economic-calendar#2020-10-22
FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

2019-10-29 22:03:00
Research, Research Team
Share:

FOMC RATE DECISIONS & US DOLLAR VOLATILITY: EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, USD/CHF

  • Fed meetings have historically sparked serious volatility in the US Dollar
  • A FOMC rate decision is due Wednesday at 18:00 GMT and puts EUR/USD, GBP/USD, USD/JPY, USD/CAD and AUD/USD at risk of experiencing changes in spot prices that are above average
  • Join DailyFX Chief Currency Strategist John Kicklighter for free live webinar coverage of the upcoming FOMC rate decision

Forex traders should be on high alert whenever there is a Federal Reserve meeting on deck judging by historical US Dollar volatility surrounding a FOMC interest rate decision. Data pulled on spot EUR/USD, GBP/USD, USD/JPY, USD/CAD and AUD/USD since 2008 reveals that USD price action is particularly elevated surrounding a Fed monetary policy update.

In fact, the average change (absolute value) in the 24-hours before and 24-hours after a FOMC rate decision is noticeably higher across the major US Dollar currency pairs listed in the table below when compared to average change on any given day.

FOMC RATE DECISIONS & AVERAGE US DOLLAR PRICE CHANGE (ABSOLUTE VALUE)

US Dollar Price Chart Volatility Around Fed Meetings

Another way to reflect US Dollar volatility around regularly held Fed meetings is by capturing the daily trading range on a FOMC decision day and comparing it to its respective 30-day average true range (ATR). Once again, we find that the US Dollar typically experiences above normal episodes of volatility in response to FOMC rate decisions.

EUR/USD PRICE VOLATILITY & FOMC RATE DECISIONS

EURUSD Price Chart Volatility and FOMC Rate Decisions

GBP/USD PRICE VOLATILITY & FOMC RATE DECISIONS

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

USD/JPY PRICE VOLATILITY & FOMC RATE DECISIONS

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

USD/CAD PRICE VOLATILITY & FOMC RATE DECISIONS

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

USD/CHF PRICE VOLATILITY & FOMC RATE DECISIONS

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

AUD/USD PRICE VOLATILITY & FOMC RATE DECISIONS

FOMC Rate Decision: US Dollar Vulnerable Around Fed Meetings

The outcome of the analysis is the same irrespective of how the data is crunched to reflect US Dollar volatility surrounding a FOMC rate decision: the central bank’s monetary policy updates serves as a serious catalyst for USD price action. That said, forex traders should thoroughly consider implementing stringent risk management techniques when trading the US Dollar around a Fed meeting – like placing tighter stops or trading smaller position sizes.

FOREX TRADING RESOURCES

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

DISCLOSURES