Trading Video: S&P 500 Rallies, Dollar Drops Ahead of FOMC
• Usually in the lead up to major event risk - like Wednesday's FOMC - markets settle in anticipation
• Despite the influence the Fed event has over the Dollar and global sentiment, both USD and SPX jumped
• Dollar and risk markets will likely thin until the FOMC, setups outside its pull would be preferential
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Typically, in the lead up to major event risk markets steady and thin out. With the FOMC rate decision due Wednesday, it would be reasonable to expect the Dollar to level out and US equities (a reflection of risk trends supported by monetary policy) to consolidate as well. The Greenback opened this week is a sizable stumble versus the Euro which may be profit taking or similar rebalancing. That said, the S&P 500's 1.4 percent rally - the biggest in six weeks - was exceptional. Are these moves - Dollar retreat and risk exposure build up - capable of extending their runs as we near the Fed's important policy update? What markets should consider within the 'blast radius' of the central bank decision and what options fall outside of it? We discuss opportunities and risks in today's Trading Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.