FXstreet.com Live Sessions Archives: Live Coverage: Fed Interest Rate Decision

Read all the Fed Live Coverage we made with Nick Nasad on Dec 16th.

FED Interest Rates Decision

(12/16/2008)
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6:47

FXstreet.com: Good morning, good afternoon and good evening to everyone all over the world. Today's FED Interest Rates Decision Live Coverage will start in 5 minutes. I am really happy to introduce Nick Nasad who is going to take part in this live event today as a presenter. She will be giving us a direct picture of the market status.

6:47

FXstreet.com: is a currency market analyst with CMS Forex for the last 3 years. He closely monitors fundamental releases and reports their results and provides commentary to the company's clients through CMS Forex's interactive economic calendar Forex Capsule and through daily Forex market video recaps. He has also written extensive educational material on using technical analysis in trading Forex.

6:48

FXstreet.com: Ahead of the FOMC meeting, the USD was sold off aggressively across the board . The EUR/USD broke through the major down tend line and hit the monthly high at 1.3737 while USD/JPY slided gradually below 91.00 level. U.S. fundamentals fell to the lowest level on record and we have not seen progress in the bailout pacage of the Big 3. Today it is widely expected that the Fed is going to cut the benchmark interest rate by 75bps to 0.25%. Nick, what do you expect for the Fed announcement?

6:48	Nick Nasad - CMS: Hello everyone, thank you very much for having me again

6:49	Nick Nasad - CMS: I guess the consensus going in was a 50 basis point cut, but as you have said traders are pricing in a more aggressive move by the Fed

6:49	Nick Nasad - CMS: bring rates down to 0.25%, this may be an attempt to get the last of the rate cuts out there and not wait till january.

6:50	Nick Nasad - CMS: also, whast importnat now is trying to gauge how the Fed will go forward with less traditional ways to help the economy now, which will focus on quantitative easing

6:51	Nick Nasad - CMS: tehre may be a bit of buy the rumor , sell the news going on here, as we saw the Euro rise again this session, and other currencies as well like Canadian Dollar and Swiss Franc

6:52	Nick Nasad - CMS: also, Aussie and Kiwi. a cut of 75 basis points though may have the effect of pressuring the Dollar more.. it remains to be seen how traders will respond to the statement, and thats why were here

6:52	FXstreet.com: Many thanks, Nick for this market analysis

6:52

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6:53	FXstreet.com: CMS General Research page

6:53	FXstreet.com: Daily video about the main market news

6:53	FXstreet.com: Expert Analysis of Today's Market

6:53	FXstreet.com: Forex Capsule - Weekly Chart Analysis and calendar for the week ahead

6:53	Nick Nasad - CMS: yes, please take a look at some of these resources that we provide daily

6:53	FXstreet.com: Now we want to know what do you expect the FED will do today! Vote the poll!

6:53	Nick Nasad - CMS: the video is a great way to get a recap of today's fundamental news along with key market highlights

6:54

Will the Fed cut the benchmark rate?
Yes, 25bps cut to 0.75%.

( 5% )

Yes, they will cut it by 50bps to 0.50%.

( 41% )

Yes, they will cut it by 75bps to 0.25%.

( 36% )

Yes. They wiill cut it by 100bps to 0.00%

( 5% )

No, they will stay on hold at 1.00%

( 9% )

No, they will hike 25bps, to 1.25%

( 5% )

6:54	Nick Nasad - CMS: one more link I would like you guys to see is our Forex Power Trading Course, which can be found here.

6:54	Nick Nasad - CMS: http://www.cmsfx.com/en/forex-education/forex-webinars/

6:55	FXstreet.com: Nick, do you personally produce the daily Forex Video, What could you explain us about this excellent content?

6:55	Nick Nasad - CMS: we are actually having a webinar start at 2 pm for anyone that wants to join., you can view the past lessons as well from that page..

6:55	FXstreet.com: Daily video about the main market news

6:56	Nick Nasad - CMS: so, looks like people here are expecting a 50 basis point cut.

6:56	Nick Nasad - CMS: one downside to a 75 basis point cut is that some can interpret that as a bit panicky by Bernanke, though he is known for pretty aggressive action since he took over as chairman

6:56	FXstreet.com: We would like to hear your comments, Please start sending them as well as your questions. Nick will try to answer as much as possible.

6:57

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6:57	Nick Nasad - CMS: right now markets are quiet in anticiaption of the release, while US stocks are higher

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7:00

Nick Nasad - CMS: we have recently launched VT Trader 2, which is a big enhancement from our previous version. We kept the same great charting package and technical analsysis, but in this release we made managing your workspace easier by incorporating tabs, auto-hide features, and other useful ways to organize all the charts you want to have up

7:01	[Comment From Guest] if fed cut 50bps eurusd down or up

7:01	Nick Nasad - CMS: I think the markets have already priced in a 50 basis point cut, and we have seen a very strong climb in the Euro the last two weeks.

7:02	Nick Nasad - CMS: i dont think there will be much of a move from that kind of cut, though the statement accompanying it may move markets

7:02	[Comment From Guest] what is your opinion on usdjpy

7:03	Nick Nasad - CMS: the USD/JPY is weaker today, though its been hugging a recent downward sloping line of resistance

7:03	Nick Nasad - CMS: connecting highs starting from thrusday

7:03	Nick Nasad - CMS: the pair has seen no reaction to upward movement in US equitites, though that did stall the falls seen overnight

7:04	Nick Nasad - CMS: so, if stocks take a liking to what the Fed does, teh Dollar will go up vs yen, but i think the gains will be contained

7:04	[Comment From Kike] Hello, good afternoon from Madrid. You mentioned earlier about quantitative measures. What's exactly means ?

7:05	Nick Nasad - CMS: usually, the fed uses the interest rate to target the price of money, now, with rates close to zero, that will no longer be a useful tool. tehrefore the fed will move to what Bernanke called the "second quiver in his bow".. the provision of liquidity

7:06	Nick Nasad - CMS: that means they try and increase the supply of monee by using the Fed's balance sheets

7:07	Nick Nasad - CMS: Japan did something similar a few years back, in order to try and bolster moeny growth and increase in activity and inflation

7:07	Nick Nasad - CMS: so, the central bank will try and signal its plans to channel credit to businesses and consumer as opposed to letting banks doing it themselves because of a lower interest rate

7:07	[Comment From Joe] At this point it may not matter. Momentum behind the EUR is strong and I don't see it move in favor of the USD

7:08	Nick Nasad - CMS: yes Joe, the momentum is strong, but with every strong move there is usually some correction or retracement. this may not come today as a result of the news, though we are seeing aturn back towards the Dollar as im typing

7:09	Nick Nasad - CMS: but a test of 1.40 may cause a retracement

7:09	[Comment From A.Gajani] Can we expect 1.40 immediately in euro/usd if the rate cut is 75 b.points. Thanks.

7:10	Nick Nasad - CMS: that may do it yes, but buying momentum may be waning as alot of trader go long eur/usd

7:11	[Comment From kristers] hi at which point should we enter the market ? either direction it will go

7:11	Nick Nasad - CMS: krister, that depends on your trading style and whether you are looking to just trade the news, are you a person that trades trends or reversals.. there are alot of factors to decide..

7:12	Nick Nasad - CMS: personally i had a eur/usd buy after we broke 1.35

7:12	[Comment From Peter] what do you think about usd/cad?

7:13	Nick Nasad - CMS: the usd/cad is a very intersting pair from a technical persepective

7:14	Nick Nasad - CMS: i think we are in a downward channel so a good place to enter would have been the test of upward line of resistance

7:14	Nick Nasad - CMS: the 1.2150-1.22 level has some support levels that are currently holding the pair up

7:14	Nick Nasad - CMS: but a break below woule be a sign that we are heading towards 1.20

7:15	Nick Nasad - CMS: right now we are looking at a triangle formationthe last 4 sessions

7:15	FXstreet.com: 1 minute to go!!

7:15	Nick Nasad - CMS: so i would look for your an entry signal once we clear the support or we bounce off support

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7:17	FXstreet.com: CMS General Research page

7:17	FXstreet.com: Daily video about the main market news

7:17	FXstreet.com: Expert Analysis of Today's Market

7:18	[Comment From big c] is it possible to think the market already put the 75bps counted into recent go up of eur

7:18	Nick Nasad - CMS: i have a feeling we have priced in 75-basis points.. and for my eur/usd i was very tempted to close out at today's high to avoid event risk.. or profit taking following the announcement

7:20	[Comment From maverick] and your position is still open?

7:20	[Comment From kristers] so you are still holding a long position eur/usd ?

7:20	Nick Nasad - CMS: yes, i have a trailing stop, and a target right below 1.40

7:21	FXstreet.com: It seems the release of the Rates Decision is delaying... The data shold have been appear few minutes ago...

7:21	FXstreet.com: Fed Cuts Discount Rate 0.75-Pt To 0.50%

7:22	FXstreet.com: Nick, as expected, the Fed cut 0.75 bps... How it would affect the dollar now?

7:22	Nick Nasad - CMS: weakness

7:23	Nick Nasad - CMS: we have a drop in usd/jpy, euro has jumped as well

7:23	Nick Nasad - CMS: seems like it wasnt priced in as much as I had though. like our vote here, there may have been still traders with a 50 basis point outlook that are now selling dollar.

7:24	Nick Nasad - CMS: that may have been on the sidelines prior to the release

7:24	Nick Nasad - CMS: FOMC says it is reviewing the benefits of buying longer-term Treasury securities to conduct policy.

7:24	Nick Nasad - CMS: and expects funds rate to stay at "exceptionally low levels" for some time

7:26	Nick Nasad - CMS: so, usd/cad is threating ints support levels now

7:26	FXstreet.com: Correction of the previous headline: Fed Cuts Rates To 0-0.25% Range; Signals New Policy Phase

7:27	FXstreet.com: So the current Rate is 0.25bps

7:27	Nick Nasad - CMS: one pair to look at is the usd/chf

7:27	Nick Nasad - CMS: ok, let me get to some more quesitons..

7:30	FXstreet.com: Let's resume now the Q&A. Please, keep on sending your questions and comments.

7:30	Nick Nasad - CMS: no my limit was not hit, but my trailing stop is very close to being executed

7:31	[Comment From Adam Neal] So have you closed your position yet?

7:31	[Comment From Guest] any chance for eur/usd to hit ~1.25 again?

7:31	Nick Nasad - CMS: that was the answer to your quesiton before neil., ok, we are having a second bout of dollar selling after a pause

7:32	Nick Nasad - CMS: i think we are not going back there again the 1.25 area

7:32	Nick Nasad - CMS: teh correlation between risk sentimetn and the Dollar, which was helping the odllar the last few months seems to be over

7:33	Nick Nasad - CMS: with such a low interest rate, and traders again focusing on us fundamentals and the amoutn of money being spent to bail out the financial system and now new quatitiative easening measures, the dollar is going to have a hard time going forward

7:33	[Comment From Joe] Where do you see USD/JPY heading right now?

7:34	Nick Nasad - CMS: we had a very strong break down off the line of resistance that you get from connecting the highs from teh last 4 sessions.

7:34	Nick Nasad - CMS: the line of support for tha channel points to 88.55

7:34	Nick Nasad - CMS: the way i drew it, (ignoring the big fall from friday as a result of senate vote on auto abailout

7:35	[Comment From kristers] so what about the eur/usd ? was this rate cut too big ?

7:35	Nick Nasad - CMS: i dont think it was too big..

7:36	Nick Nasad - CMS: but Bernanke does not make his decisions with the dollar in mind.

7:36	Nick Nasad - CMS: i think we are reacting to the fed's words on quantitative easing

7:36	Nick Nasad - CMS: abnd the promist to keep rates low, and buy up long term treasuries

7:37

Nick Nasad - CMS: a few key passages from the Fed's statement "The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level.... The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity."

7:38	[Comment From nayeem] would the euro return to 1.365 anytime soon?

7:38	Nick Nasad - CMS: we are in a bit of abreakout situation now..

7:39	Nick Nasad - CMS: we may have a pull back, with that level acting as resistance turned support

7:40	Nick Nasad - CMS: but we have to see how the action goes.. my limit was executed by the way at 1.3980

7:41	[Comment From Guest] Nick do we expect Downward movement on usdjpy to continue in the ASian session?

7:42	Nick Nasad - CMS: yes, we may., i see support levels at 88.55 and 88.10.. we may reach those.. but the measures taken by the fed may be greeted with stock gains in the asian session, which would help the usd/jpy.. maybe more than stock gains in the US.

7:43	Nick Nasad - CMS: dow jones is up 240 points btw..

7:44	[Comment From Lyle] Should we short the pound

7:44

Nick Nasad - CMS: teh pound has been doing well against the dollar, just like the euro, but not to the same degree.. which means teh pound is weaker than teh euro (obviosu from looking at eur/gbp.. i see interset rates cuts continuing from teh bank of enlgnad which will pressure the pound going forward

7:44	Nick Nasad - CMS: however right now./. we hit key resistance at 1.5510

7:45	Nick Nasad - CMS: and teh upward sloping line of resistance from the recent channel starting with december

7:45	Nick Nasad - CMS: so a sell is a good trade if some of your other indicators line up and u feel the pair is overbought.

7:46	[Comment From zeb] 1.47 next in medium term

7:46	Nick Nasad - CMS: for the medium term, teh fibo retracement from 1.60 to 1.2350 coming up are 50%, at 1.4167 and 61.8% at 1.4604

7:47	[Comment From sin] where do you see gbp/usd$?

7:47	Nick Nasad - CMS: like i mentioned just before, the pound going forward will be pressured as its economy is facing a bad recession and tehy will contiue cutting rates where the us will not..

7:48	Nick Nasad - CMS: that will shrink the interest rate yield which should favor the dollar

7:49	Nick Nasad - CMS: currently, we may have a retraction as we are at the upward range of the upward channel in the pair.. we have already dropeed back 50 pips or so since our intra-day high near 1.5510

7:49	[Comment From wh] what does quantitaive easing mean?

7:50	Nick Nasad - CMS: ususally the fed tries to set the price of money using its interst rate. now it will focus on actually increasing the money supply by using its balance sheet.

7:51	Nick Nasad - CMS: in layman terms they are going to flood the world with dollars, enlarging its balance sheets.. total fed assets on its balance sheerts have soared 1.3 trillion since sept 10th

7:51	Nick Nasad - CMS: for a total of 2.26 trillion.. in the long run that will put more money in the hands of businesses and consumers (not just banks) but will hurt the dollar's value.

7:52	[Comment From Malcolm] Did the feds give an actual specific rate cut ...CNBC says between 0 and .25. does this mean banks can negotiate anywhere between this range

7:53	Nick Nasad - CMS: some banks like switzerland always put a range.. which is what the fed has done today.. effectively the target rate is lower than 0.25%..

7:53	Nick Nasad - CMS: which may explain alot of the suprise and jump in currency markets

7:53	[Comment From kristers] so the fed will try to keep the dollar low

7:55

Nick Nasad - CMS: the fed is less concerned about the value oif the dollar than it is the state of the economy.. with this move however they are signalling that we have some serios weakness, so why hold the currency.. one plus is that the trade sector is the only place the US has been seeing some growth and a lower dollar should help exports

7:55	Nick Nasad - CMS: if we have a retest of support in eur/usd it will be near 1.3740

7:58	Nick Nasad - CMS: im sorry, there are alot of questions and i cant answer them all..

7:58	FXstreet.com: We are short of time now... Let's answer the last question!

7:58	[Comment From Sebouh] Will the USD crash from here. The dollar went down more then 10 percent in one week. Do you guys think that we wil revisit JULY highs in Euro or this is short term blip

7:59	Nick Nasad - CMS: Sebouh, the rally we saw in October as a result of the intensification of the financial meltdown and teh flight to safe haven in US dollars is over

7:59	Nick Nasad - CMS: especially, as some people are asking about ECB, they may have one mroe rate cut in them.. and otherwsie are going to be hawksih going forward

8:00	Nick Nasad - CMS: that will mean we will see a continuation of weakeness in the US Dollar

8:00	Nick Nasad - CMS: as traders begin to again focus on fundamentals of the economy..

8:01	Nick Nasad - CMS: i am not sure if we will get back to 1.60 anytime soon, but we are definetly hading for 1.45 in the next month or so (if not next couple of weeks)..

8:02	Nick Nasad - CMS: i think the 50% retracement of 1.60 to 1.2450 at 1.4160 is going to be a key level in the short term and if we have a pulllback in favor of the dollar strength, it may be an opportunity tpo pick up a dollar long

8:03	Nick Nasad - CMS: i hate to leave with so many questions so ill say a couple more words on some other currencies..

8:04	Nick Nasad - CMS: teh aussi and kiwi are not the only banks with relatively higher interst rates and they both soared after the release.. since they were at higher rates to begin, they may come out of the new year in better shape than the us dollar.

8:04	Nick Nasad - CMS: in minutes overnight for example teh RBA said they are going to wait and see how the recent cuts affect the economy, boosting aussie.. so aussie and kiwi should go higher in the medium term

8:05	Nick Nasad - CMS: the pound is as week as the Dollar, because of its deep recession and the fact that the BOE is one bank that remains very dovish.

8:05	Nick Nasad - CMS: we saw a good bounce down off resistance at 1.5510 and i think buying the pound is a risky move

8:06	Nick Nasad - CMS: i know sebouh, its all relative..

8:09	Nick Nasad - CMS: sorry,. got disconnected there..

8:09	FXstreet.com: Time ti wrap up this Live Coverage of the Fed Interest Rates decision. Nick, any final conclussion?

8:09	Nick Nasad - CMS: i think today we have finally seen the end of the US Dollar rally.. though we may have some correction going forward, I think we are going to see the dollar sold off in the weeks and months to come..

8:10	Nick Nasad - CMS: thank you so much for having me and giving me your questions

8:10	FXstreet.com: I would like to specially thank CMS Forex, today’s sponsor, for their support. Use these links to follow up about today’s main market news. Open a live account with CMS with a low minimum initial deposit of $200 now.

8:11	FXstreet.com: Daily video about the main market news

8:11	FXstreet.com: Expert Analysis of Today's Market

8:11	FXstreet.com: Many Thanks to you, Nick for your participation today in this live event!

8:11	Nick Nasad - CMS: http://www.cmsfx.com/en/my-account/open-free-practice-account/ultimate-forex-championship/

8:11	FXstreet.com: you are about to start the Daily Video production isn't it?

8:12	Nick Nasad - CMS: any live accounts are automatically entered into the trading contest we have going on right now

8:12

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8:12	Nick Nasad - CMS: yep., time to make today's video recap.. thank you everyone for your time

8:13	FXstreet.com: Daily video about the main market news

8:13	FXstreet.com: So don't forget to watch today's CMS Forex Video

8:13	FXstreet.com: Nick, at what time will be published?

8:14	Nick Nasad - CMS: today's will be ready in a few hours, usually we post them by 5 PM EST.

8:14	FXstreet.com: And our viewers could subscribe to the RSS to follow it every day, right?

8:14	Nick Nasad - CMS: yes

8:14	Nick Nasad - CMS: let me provide a link

8:15	FXstreet.com: ok, perfect!

8:15	Nick Nasad - CMS: http://www.cmsfx.com/rss/daily-videos.xml

8:16	FXstreet.com: Thanks Nick for the link and for your participation i today's Coverage. Next Week we will have Nick Nasad again with us for the US GDP Live Coverage.