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
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Bullish
More View more
Real Time News
  • 🇫🇷 Consumer Confidence Actual: 93 Expected: 92 Previous: 95 https://www.dailyfx.com/economic-calendar#2020-05-27
  • 🇫🇷 Business Confidence Actual: 70 Expected: 85 Previous: 68 https://www.dailyfx.com/economic-calendar#2020-05-27
  • USD/MXN remains caught in a choppy range, which generally has traders looking for a directional move frustrated. Get your $USDMXN technical analysis form @PaulRobinsonFX here: https://t.co/gCXqAEGVix https://t.co/fVb44SoBzx
  • Heads Up:🇫🇷 Consumer Confidence due at 06:45 GMT (15min) Actual: 93 Expected: 92 Previous: 95 https://www.dailyfx.com/economic-calendar#2020-05-27
  • Heads Up:🇫🇷 Business Confidence due at 06:45 GMT (15min) Actual: 70 Expected: 85 Previous: 68 https://www.dailyfx.com/economic-calendar#2020-05-27
  • 🇳🇴 Unemployment Rate Actual: 3.6% Expected: 4% Previous: 3.5% https://www.dailyfx.com/economic-calendar#2020-05-27
  • Heads Up:🇳🇴 Unemployment Rate due at 06:00 GMT (15min) Expected: 4% Previous: 3.5% https://www.dailyfx.com/economic-calendar#2020-05-27
  • EU Foreign Affairs Minister Josep Borrell: EU to weigh 'robust' message to China over Hong Kong, China wants to influence global public opinion -BBG
  • Japan total bond issuance is said to rise above 200 trillion #Yen -BBG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.61%, while traders in US 500 are at opposite extremes with 75.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/e9Wte2ys3d
FOMC Holds and the Dots Go Down: USD Crushed

FOMC Holds and the Dots Go Down: USD Crushed

2016-03-16 19:04:00
James Stanley, Strategist
Share:

Talking Points:

-The Fed held rates at this afternoon’s FOMC meeting.

- The Fed did reduce the dot plot matrix, or expectations for future rate hikes, and this has brought considerable volatility into markets. Key themes being USD weakness, Yen strength, Gold and Equities strength.

- Trading around such news can be dangerous. If doing so, please address risk management.

This afternoon’s widely awaited Federal Reserve meeting brought no adjustment to interest rates as the Fed elected to hold at this meeting.

But we did get a reduction in the Fed’s Dot Plot Matrix, and as we mentioned in our market talk article this morning, this would likely set the tone across capital markets. The dot plot matrix is the median expectation of the ‘central tendency’ for rates for the coming quarters. In Central Bank-speak, this means where each member of the Fed expects rates to be in the not-too-distant future. This had previously been a major sticking point for markets as the Fed has stuck to a rather aggressive forecast for four full rate hikes for 2016 in their most recent batch of projections in December 2016. At that meeting, the Fed hiked rates, but the accompany projections looking for four full hikes in 2016 appeared to be too much for markets to bear with the concurrent risk factors of China and Oil.

The initial reaction across markets did not disappoint; US Dollar weakness was, of course, a predominant theme as traders sold out of the Dollar on the back of these lowered expectations from the Fed. This has also led to a considerable rally in Gold, which is continuing to throttle higher as of this writing. And Yen strength is showing with considerable aggression.

FOMC Holds and the Dots Go Down: USD Crushed

Created with Marketscope/Trading Station II; prepared by James Stanley

This could be a positive for stocks as it assuages one of the primary risk factors facing global markets at the present. Much as we’ve seen over the past 8 years in the post-Financial Collapse environment, considerable risk can be absorbed if the world’s largest Central Banks are actively supporting markets. And the Fed’s response today, reducing rate hike expectations, is a clear sign that they’re responding to capital markets.

--- Written by James Stanley, Analyst for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES

News & Analysis at your fingertips.