www.TheLFB.com A Forex Trader Portal
Wall Street equities are moving higher, but on hugely decreased volume levels ahead of the FOMC rate decision and statement. The lack of volume is akin to building a house of cards on the beach; it may look good, but is susceptible to quickly falling apart. The volume is in the commodity market, and has been all month, revealing the reason for currencies to get aligned to oil market moves, and hopefully dump the equity link to some degree.
Twelve months of currency trading, while following the thin and sometimes illiquid S&P Futures market, has been painful, TheLFB Trade Team said. If this is the change back to trading forex from an interest rate and commodity supply and demand perspective will be refreshing, and historically what Forex traders are used to, they added.
The last three months of FOMC statements have produced solid trade reaction, and looking at the cause and effect building in currency pairs, it may very well be the same this time around. There is not one major pair that is not at a swing point area, and as such the reaction could last for weeks.
There does not look to be much that the Fed and FOMC members can say in the statement at 14:15 EDT that can empower the dollar; all variables point to the reaction in equities to be either to go long (and send the dollar lower), or to go short (and the dollar goes lower because the major pairs are possibly separating themselves from equity trade).
There is no point in guessing the outcome, and traders need to be prepared to buy or sell the dollar, on the understanding that long-dollar trades may require a reduced lot size, and closer targets; the major pairs look to have a long bias at the moment against the greenback.