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Video: Beware Dollar and 'Risk' Trades Ahead of Fed Rate Decision

Video: Beware Dollar and 'Risk' Trades Ahead of Fed Rate Decision

2015-10-27 00:31:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• We are heading into the final countdown to Wednesday's FOMC rate decision

• Technical breaks from the likes of EURUSD and the S&P 500 look tempting, but will struggle heading into the meet

• UK GDP and Chinese data is top fodder for Tuesday, and may highlight opportunities for Pound based crosses

See the DailyFX Analysts' 4Q forecasts for the Dollar, Euro, Pound and Gold on the DailyFX Trading Guides page.

The impressive breakouts from the Dollar and global equities this past week lost considerable momentum through Monday trade. This week is laden with high-level event risk and at the center of it all, we have Wednesday's FOMC rate decision. While many market participants have a notion of how it will play out - a hold on policy and a softer tone on future policy ambitions - it would be a tremendous risk to try and front run such an outcome. The IMF was one of many global policy groups that warned the eventual change in the US central bank's policy stance will generate considerable volatility for the financial system. Few will want to trade against that risk. With Dollar and risk-oriented exposure reserved for only the most fearless/reckless, we will need to look elsewhere for setups longer than daily swing trades. The Pound may be a good option depending on how the UK GDP figure prints. We look at the exposure to avoid and pursue in today's Trading Video.

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