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.



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

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
Wall Street
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
  • Further your forex knowledge and gain insights from our expert analyst @ @MartinSEssex and @DColman on EUR with our free Q4 market analysis guide, available for free today. #Dailyfxguides
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here:
  • RT @Stephanie_Link: 84% of $SPX companies have beaten EPS estimates to date for Q3, which is tied for the 3rd highest percentage since 2008…
  • What is #NFP and how can you trade it? Find out:
  • What does it mean when one candle fully engulfs the previous in its price action? The bullish engulfing candle is one of the forex market?€?s most clear-cut price action signals. Figure out how to identify this pattern here:
  • Oil maintains a medium-term bullish outlook, but its overbought condition and price's proximity to key technical resistance may pave the way for a brief pullback before the next leg higher. Get your weekly oil forecast from @DColmanFX here:
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here:
  • The update to the US GDP report may keep the Greenback under pressure as signs of a slowing recovery undermines speculation for an imminent shift in Fed policy. Get your weekly USD forecast from @DavidJSong here:
  • There a many different trading styles that can be applied to trading forex. Learn about different types of traders here:
  • Hang Seng Tech Index has likely formed a bullish “Inverse Head and Shoulders” chart pattern. Immediate support and resistance levels can be found at 5,800 and 7,433 respectively. Breaching above 7,433 would likely bring 8,266 into focus.
FOMC Event Risk: How Will the Market React?

FOMC Event Risk: How Will the Market React?

Justin McQueen, Strategist

USD, Fed Price Analysis & News

  • Markets on Tenterhooks Ahead of Fed Meeting
  • All Eyes on the Dot Plot Again

Markets on Tenterhooks Ahead of Fed Meeting

Despite some overnight excitement with the latest actions in China regarding Evergrande. FX markets have been stuck in the usual pre-FOMC lull during the London session. As the time nears for the eventual Fed taper, market participants will be keeping a close eye on whether any explicit details are mentioned in tonight’s statement, while focus will also be on the latest dot plot projections.

Dot Plots: The key market mover could be on the dot plot projections as the Fed provides a first look at the 2024 dot plot.

  • A reminder that the dot plots released at the June meeting showed 7 members expect a Fed rate lift-off in 2022. Therefore, three more members would need to move towards a hike to see a shift in the median dot-plot for a 2022 rate hike.
  • For 2023, there would need to be two members to shift in order to bring the median projection to three rate hikes. In which case, this would raise the risk of four hikes being shown in the 2024 dot plot.

That said, this would be a very hawkish outlook relative to market expectations. Chair Powell would likely use the presser to downplay the significance of the dot plots, as he has done numerous times in the past where everyone had focussed on the dot plots. But much like June, that didn’t stop the USD from rallying over 2% in the subsequent few sessions.

All Eyes on the Dot Plot Again

FOMC Event Risk: How Will the Market React?

China Risks Provide a Reason For Caution

However, while in recent sessions playing the hawkish view might have had value, given that the USD is near the August highs, rising over 1% in the past week amid safe-haven demand and an increasing amount of market participants anticipating a hawkish meeting, the value has somewhat diminished.

Keep in mind, that Chinese risks are at the forefront of investors’ minds and also in the minds of central bankers (as per RBA Debelle’s comments overnight). In turn, the rising uncertainty in China has prompted US equity markets to fall 5% from all-time highs for the first time since October. Therefore, this does provide an excuse for Powell and Co. to stick to a relatively cautious stance where even the slightest of hints that a taper takes place in 2022 could be enough to prompt a rally in risk appetite, which would also mean 2022 and 2023 dot plots left unchanged while 2024 dot plots see three rate hikes.

The Fed put is a real thing, below is an abstract on the study regarding the Economics of the Fed Put.

Since the mid-1990s, negative stock returns comove with downgrades to the Fed’s growth expectations and predict policy accommodations. Textual analysis of FOMC documents reveals that policy makers pay attention to the stock market. The primary mechanism is their concern with the consumption wealth effect, with a secondary role for the market predicting the economy. We find little evidence of the Fed overreacting to the market in an ex post sense (reacting beyond the market’s effect on growth expectations). Although policy makers are aware that the Fed put could induce risk-taking, moral hazard considerations appear not to significantly affect their decision-making ex ante.

Scenario and FX Outperformer:

  • Hawkish Dot Plots and Explicit Taper Signal: USD outperforms, particularly against low yielders (JPY, CHF & EUR)
  • Cautious & More Dovish Than Expected: USD weakens most notably against CAD and AUD (currently has record shorts, according to CFTC data)

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