Live Coverage: Fed Interest Rate Decision
| Fed Interest Rates Decision with Nick Nasad | (03/18/2009) |
7:00 | FXstreet.com: Good morning, good afternoon and good evening to everyone all over the world. Today's Fed Interest Rates Decison 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 co-presenter. He will be giving us a direct picture for the market status. |
7:00 | Nick Nasad - CMS: Hello everyone, thank you for having me back on fxstreet |
7:01 | Nick Nasad - CMS:
We come into today’s meeting with the Fed having to worry about a deepening recession, though rates are already near zero and several programs are under way to try and ease credit markets. Such programs include the Fed buying asset-backed securities in order to increase capital at companies. One arrow in the Fed’s quiver would be to state that it would increase the pace at which it buys these asset-backed securities, which would be a sign of risk appetite. |
7:01 | FXstreet.com: Nick Nasad 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. |
7:01 | FXstreet.com: Welcome Nick! Thanks for joining us today again! |
7:01 | Nick Nasad - CMS: thank you for that introduction. |
7:02 | Nick Nasad - CMS: We come into today’s meeting with the Fed having to worry about a deepening recession, though rates are already near zero and several programs are under way to try and ease credit markets. Such programs include the Fed buying asset-backed securities in order to increase capital at companies. One arrow in the Fed’s quiver would be to state that it would increase the pace at which it buys these asset-backed securities, which would be a sign of risk appetite. |
7:02 | Nick Nasad - CMS: Markets will be looking for language that shows the Fed is up to the task of stimulating the economy and shoring up banks and the financial sector. Increasing the purchase of asset-backed securities can help ease risk aversion, while a failure to expand its rate of purchases could do the opposite. However, as we saw earlier today, the Dollar fell against the Euro as these steps taken by the Fed could create excessive money supply which debased the currency. |
7:03 | Nick Nasad - CMS: which could debase the currency* |
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7:03 | Nick Nasad - CMS: Another step would be a move towards quantitative easing, which means the Fed would use its balance sheet to purchase Treasuries. The Fed has discussed buying Treasuries to exert pressure designed to lower rates on the many corporate, mortgage and consumer loans linked to benchmark government debt. Both Japan and the UK have begun buying back their government bonds in order to increase money supply in the economy. It does not seem that the Fed will say that they are ready to undertake these measures though, and will instead leave open the possibility as they did in their January statement. |
7:04 | Nick Nasad - CMS: let me take some questions as we are about 10 minutes away from the release of the statement |
7:04 | [Comment From Guest] what so you think about the moe in EURUSD, will there be a follow through or just acorrection |
7:04 | FXstreet.com: CMS General Research page |
7:05 | Nick Nasad - CMS: the action overnight was very interesting in the EUR/USD pair as the Euro gained despite risk aversion in most of the other charts and currency pairs. |
7:06 | Nick Nasad - CMS: i think a good portion of that is speculation that the Fed will say they will increase the rate at which they buy asset-backed securities, leading to a increase in supply of money which could lead to a decrease in price if demand stays the same. |
7:06 | Nick Nasad - CMS: we are seeing a continuation of Monday's rally following a period of consolidation yesterday |
7:07 | Nick Nasad - CMS: and though it may not happen today, i have the pair moving to at least 1.33 before the pair begins a counter-rally in the greenbacks direction. |
7:07 | [Comment From Woi] What is your prediction /EURUSD during FOMC meet? |
7:08 | Nick Nasad - CMS: i have been taught not to try and predict what will happen, but rather to anticipate the different scenarios and how they will play out. |
7:09 | Nick Nasad - CMS: what we are looking for is langugage on wehter the Fed will increase its rate of purchases of asset-backed securiteis and wethere buying of treasuries is mentioned in the statement (even if its an open ended statement to have this option on teh table.) |
7:09 | [Comment From Guest] how will it impact eur usd and GBP usd |
7:10 | Nick Nasad - CMS: the pound saw a steep sell off overnight as its employment data came in far below expectations, though the GBP/USD pair saw a strong bounce near the beginning of US trading. |
7:10 | Nick Nasad - CMS: i think the Pound should remain pressured , and a retest of the 1.37 level could be in order. |
7:11 | FXstreet.com: Let's see what you all think about the outcome of today's meeting... |
| 7:11 | Will the FOMC keep the benchmark rates? Yes, the FOMC will hold the ongoing rates ( 76% ) ( 16% ) ( 4% ) ( 4% ) |
7:13 | Nick Nasad - CMS: my expectation is that the Fed will hold rates at the current 0-0.25% target range |
7:13 | Nick Nasad - CMS: and they have signaled that rates will stay at that low level for an extended time. |
7:13 | [Comment From santosh] due you think that has got anything to do with QE on tres? |
7:14 | FXstreet.com: 1 min left |
7:15 | Nick Nasad - CMS: there seems to be a move towads greenback strenght prior to the release. |
7:16 | Nick Nasad - CMS: sorry had a technical issue. |
7:17 | Nick Nasad - CMS: santosh thats a very good point, and i think any move towards quantitative easing will pressure the dollar, the same way it has pressured the Pound when the Bank of England began their program. |
7:17 | FXstreet.com: No change |
7:17 | FXstreet.com: 0.25 |
7:17 | Nick Nasad - CMS: http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm |
7:17 | Nick Nasad - CMS: here is a link to the release.. |
7:18 | Nick Nasad - CMS: To provide greater support to mortgage lending and housing markets, the
Committee decided today to increase the size of the Federal Reserve’s
balance sheet further by purchasing up to an additional $750 billion of
agency mortgage-backed securities, bringing its total purchases of
these securities to up to $1.25 trillion this year, and to increase its
purchases of agency debt this year by up to $100 billion to a total of
up to $200 billion. Moreover, to help improve conditions in private
credit markets, the Committee decided to purchase up to $300 billion of
longer-term Treasury securities over the next six months. |
7:18 | FXstreet.com: CMS Forex, today’s Sponsor also produces expert analysis, market research and daily market news coverage with videos and reports. Browse the following URLs to learn and take profit from their expertise. |
7:19 | Nick Nasad - CMS: the Eur/usd has surged on this news as the Fed said they will purchase tresuries adn announced other increases in purchasese of asset-backed securities |
7:19 | Nick Nasad - CMS: wow, we hit 1.33 in a huge 5 minute candle. |
7:20 | Nick Nasad - CMS: teh greenback is being pressured on all fronts, the USD/JPy hsa plummeted to 96.60 |
7:21 | [Comment From Guest] Do you expect a very strong bounce to 1,38 like citigroup telling us or just a bounce to 1,33 and then back to 1,23 |
7:22 | Nick Nasad - CMS: the swiftness of this reaction means many traders and institutions are betting in one direction. |
7:23 | Nick Nasad - CMS: we are seeing a pause now but unless this is a gross overreaction, the dollar will remain pressured by these actions. |
7:23 | [Comment From luka] what about USDCAD |
7:24 | Nick Nasad - CMS: the greenback weakness is helping the Loonie, it has set a new low for this week, and with a downward channel setting up starting on March 10/11th.., a target could be 1.25. |
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7:25 | Nick Nasad - CMS: the current area is horizontal support from mid February, which may stall the pair's current fall. |
7:26 | Nick Nasad - CMS: we are seeing some retraction in the USD/JPY, but the Euro and POund are mainly holding onto their gains. |
7:28 | Nick Nasad - CMS: equities in the US are responding well to the news, pulling the main dow indes back into positive territory, and accelerating gains in the nasdaq and s&p 500 |
7:30 | Nick Nasad - CMS: the importance of the Fed's annoucnement is that by buying Treasuries the Fed will to exert pressure designed to lower rates on the many corporate, mortgage and consumer loans linked to benchmark government debt. That will be positive for increasing money supply and boosting lending. |
7:31 | Nick Nasad - CMS: we seem to have gotten past the stops and limits traders have placed at the or slighlty above the 1.33 level, |
7:32 | Nick Nasad - CMS: and we are entering a second phase of dollar weakness |
7:33 | Nick Nasad - CMS: follow through is very strong, as the markets seem shocked by this annoucnement. |
7:33 | FXstreet.com: Nick, we're seeing big movements. How the Fed decision to buy Treasurys affect the market sentiment? |
7:34 | Nick Nasad - CMS: well we are seeing very strong greenback weakness, as this announcement should beneefit most other assets, boosting risk sentiment. this was definetly a crowd pleaser from the Fed. |
7:34 | [Comment From Guest] the effect of SNB injection did not last even a week,,, sharp sell off,,, |
7:35 | Nick Nasad - CMS: yes, the SNB must not be pleased.. though the Swiss Franc is holding agains the Euro |
7:36 | Nick Nasad - CMS: the USD/CHF has hit support from February 3rd |
7:36 | [Comment From Guest] can we see a retracement in euro dollor? |
7:37 | FXstreet.com: Interest rates unchanged at 0.25%, Fed will buy Treasurys and more MBS - News by FXstreet.com: http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=37e36a00-d519-4f44-b562-e61058d5970e |
7:37 | Nick Nasad - CMS: i think such a sharp move will call for a retracement as weve gotten far away from teh established trendlines from teh past 2 weeks, and more shrot term moving averages. |
7:38 | Nick Nasad - CMS: teh current zone we are in was a very importnat level in early January, which helped fuel a greenback rally. the pair retested this zone near January 16th and again near January 28th, but has not done so since then. |
7:39 | Nick Nasad - CMS: i think more longer term traders have entry orders, and stops and limits that are now being triggered. |
7:39 | [Comment From Guest] I dont see why this move in the eur/usd will persist, lots of this quantitative easing was probably priced in since the currency pair broke above 1.26 |
7:40 | Nick Nasad - CMS: i think there the strength we have been seeing in the EUR/USD had a lot to do with the recent rally in global equities as most traders did not expect this statement to buy treasuries to come out of the today's fed meeting. |
7:40 | Nick Nasad - CMS: therefore, teh trend we were seeing since 1.26 has now accelerated. |
7:40 | [Comment From wayne] wow...i made more today that I have all week! |
7:41 | Nick Nasad - CMS: congrats, such volatility is def. good for forex traders |
7:41 | [Comment From Guest] will the eur/usd go bearish again............ |
7:42 | Nick Nasad - CMS: a turnaroudn in the mood of investor's which has become more bullish recently and a return to safe haven would help the dollar, |
7:42 | [Comment From Guest] now that the Loonie touched the 1.25 mark, will it continue to go futher down? |
7:43 | Nick Nasad - CMS: the loonie is acting nicely with teh downward channel that was established recently.. if you connect highs from March 9th and 12th, and project a parrelel line to teh low on march 10th.. |
7:44 | Nick Nasad - CMS: today's fall stalled right at that line of support. |
7:44 | [Comment From Guest] USD panic sell across the board ,,, EURGBP spike is pretty interesting to me |
7:44 | Nick Nasad - CMS: yes, the euro seems to be a big winner from this news |
7:46 | Nick Nasad - CMS: and though this annoucnement was very surprising, i do feel a sense that perhaps markets are seein a bit of "panic" or perhaps overreaction |
7:46 | [Comment From Guest] it is very strange to see gpb moving upwards, thye have such bad data today and despite that it is moving up:) |
7:47 | Nick Nasad - CMS: yes, its all relative sometimes, but such a surprise annoucnemnet by the Fed, to buy 300 billion in treasuries overshadowed the news from overnight. |
7:47 | [Comment From Guest] Do you see cable holding on to it's gains? |
7:48 | Nick Nasad - CMS: the gbp/usd has some more clearer resistance levels from two weeks ago that should limit further gains by the Pound, and as we mentioned the weak unemployment data adds to a sense that the UK economy is still facing a deepenign recession. |
7:49 | Nick Nasad - CMS: so, though the rest of today's session may show it retaining its gains, its important to see what happens going forward after the shock of today's annoucnemnet wears off. |
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7:50 | [Comment From Guest from Seattle] Is it anticipated that the EUR/USD will break in the near future the 200 day EMA? |
7:50 | Nick Nasad - CMS: thoguh i feel the 1.35 level should play as important resistance, a move towards the 200 m.a. may mean a repeat of the surge in teh EUro we saw in December. |
7:51 | Nick Nasad - CMS: which has an upside near 1.40/1.45.. |
7:52 | Nick Nasad - CMS: it seems that we have reached another pause in the dollar's fall. |
7:55 | Nick Nasad - CMS: Though the Dollar is falling, the Fed may have done the right thing as lower yields on 10-year treasury notes will help lower mortgage rates, improving the hosuing market and supporting the economy. |
7:55 | FXstreet.com: Forex: EUR/USD climbed up 300 pips after Fed decision - News by FXstreet.com |
7:55 | [Comment From Guest] somehow weaker USD that can boost US exports is welcomed, furhter oil is not so expensive,, |
7:56 | Nick Nasad - CMS: a weaker dollar could boost exports, but the global economy needs to see a rebound before exports increase. we have seen a strong contraction in global trade from Japan, to Germany to the US. |
7:56 | [Comment From wayne] amazing how volital this is....this almost makes me beleive that technical analysis has nothing to do with currencies anymore...its almost all emotional perception and news |
7:58 | Nick Nasad - CMS: technical analysis can help to lay out important levels, and for the most part a technician believes that price reflects all news. the fact that we had such a strong response means that the market was pricing in the new information very quickly |
7:58 | [Comment From Guest from Seattle] What I don't understand is the logic that people would rather sell USD and buy other currencies as the US Treasuries will give higher yields by the FED announcement. Why is this so bearish on the USD? |
7:59 | Nick Nasad - CMS: i think what you are missing here is that, when there is an increased demand for treasuries, such as with today's announcement and treasuries rally, it lowers the yield. |
8:00 | Nick Nasad - CMS: and there are other factors to consider.. that the Fed will be expanding its balance sheet further which is dollar negative, and that the news was very well recieved by equities markets which reduced risk aversion (a major reason the greenback has been stronger recently- well before the current rally in equities) |
8:01 | [Comment From Nour] As dollar index on strong support now , do u thin it will break under |
8:01 | Nick Nasad - CMS: i think today's moves might have found some exhaustion and though im not looking at the dollar index, if we have come against strong support that may the thing that stalls today's rally.. |
8:02 | Nick Nasad - CMS: today's selling of greenbacks i mean |
8:02 | [Comment From wayne] wow 300 pips..any recommendation on getting out.??...I was in with 3 currencies....when it jumped and it was moving so fast...my trade request kept expiring...lost about 60 pips in second on each pair...but still made good for today! |
8:03 | Nick Nasad - CMS: i dont want to give you advice, but if you have the chance to scale down your positions and take profit it could be a very good idea. |
8:03 | Nick Nasad - CMS: the liquidity in teh markets seems to have dissapated somewhat, though currencies like the USD/CAD are pushing further down. |
8:03 | Nick Nasad - CMS: even the EUR/USD is still at its high for the day |
8:04 | Nick Nasad - CMS: so maybe traders are trying to touch the 1.35 level in that pair. |
8:04 | Nick Nasad - CMS: so, its really up to your strategy when you entered the trade and what plan you had for your trade prior to when you opened it. |
8:04 | [Comment From Guest from Seattle] Yes, I had it backwards, sorry. Understand now. Thanks. |
8:05 | Nick Nasad - CMS: glad i can help. |
8:05 | [Comment From Palii Denis] After emotions pass away from traders, what is the projected retracement level of Eur/Usd (according to you)? |
8:06 | Nick Nasad - CMS: with such a strong move its gonna be hard to tell which support levels will hold, but a move back to 1.33 a 50% retracement of the runup following the announcement could be in order. |
8:06 | Nick Nasad - CMS: that was teh level wehre many saw the pair heading to prior to the surprise annoucnement, so that could be a place where i woudl ay "expected" resistance can turn to support. |
8:07 | Nick Nasad - CMS: where i would say* |
8:07 | [Comment From Guest] Japan is not happy again,,, lol seems very far 100.00 level. almost there though |
8:08 | Nick Nasad - CMS: Japan would prefer to have a weaker currency to help boost exports but seems like 100 acted as strong resistance,. we are establishing a downward channel with today's moves reaching the bottom line of support. |
8:08 | Nick Nasad - CMS: we are seeing some further follow through in the Euro and Pound |
8:09 | Nick Nasad - CMS: greenback bears are not done just yet. |
8:09 | Nick Nasad - CMS: im getting alot of questions about retracements |
8:11 | Nick Nasad - CMS: we have to wait for this greenback weakness to fade, which means waiting for a candle in teh oppositie direction of the rally in whatever time frame you are looking at... though its enticing to sell such a sharp move, someitmes its like catchign a falling knife.. though you may miss the initial move, its better to not get caught on the other side of such a biased rally. |
8:12 | Nick Nasad - CMS: for instance, 10 minutes ago, while we saw a pause we may have though a sell would be good, but we are seeing some follow through, its better to be patient and see price action confirming a counter-rally before placing an order.. thats a more conservative approach. |
8:13 | FXstreet.com: GBP/USD jumped up to 1.4250 after Fed statement - News by FXstreet.com |
8:13 | [Comment From Sebouh] The Euro today reminds me of the December rally last year when it jumped from 1.26 to 1475 in a matter of two weeks and after that it went back to 1.25. Again I think market is insane just like the policy makers who are managing the financial crisis. |
8:14 | Nick Nasad - CMS: sebouh, its true that markets can be volatile, but in december it was the Fed strong move to move to a zirp (zero interest rate policy) policy |
8:15 | Nick Nasad - CMS: and today's news revolves a very surprise announcement regarding buying treasuries.. |
8:16 | Nick Nasad - CMS: so, its not random, though currency markets can get pretty volatile.. i think you may be harsh on policy makers, as they are trying their best, and for teh most part this move should help teh economy, though it may have some unintented consequnces in the longer term. |
8:17 | [Comment From Sebouh] I have a feeling that this equity hipe will run its course by end of April and markets will go back to the fundamentals. I expect short term dollar weakness but medium term and long term the dollar will again shine. Let us not forget we are still in a serious crisis anyone things that the crisis will end this year is simply illusional |
8:18 | Nick Nasad - CMS: yes, that was the main reason that the greenback faught its way back to the 1.25 level after that December rally. |
8:19 | Nick Nasad - CMS: we are straying a little from the live coverage with these question, but I think its importnat to talk about some of the longer term impacts. |
8:19 | [Comment From Lanre] But are they not adding gasoline to the fire? |
8:19 | [Comment From Lanre] Too much easy money cause the problem now they are adding more money to the system how will that solve it |
8:20 | FXstreet.com: USD/JPY falls below 96.00 after Fed releases, test 96.65 support - News by FXstreet.com |
8:20 | Nick Nasad - CMS: Lanre, theres a difference between easy money when everyone wants to borrow it and use it.. the housing bubble in the US.. whereas now tehres easy money but not as many willing takers.. in fact banks are so strapped for money and have bad assets on tehir balance sheets that they are limiting lending for things like homes, cars, and other loans. |
8:20 | Nick Nasad - CMS: what the Fed is trying to do is lower the cost to borrow, and to try and unclog these credit markets.. |
8:21 | Nick Nasad - CMS: the flip side is that the balance sheet of the Fed increases, there are fiscal stimulus packages to pay for, and all of this can lead to a weakness in the greenback when things return to a more "normal" state of things |
8:22 | [Comment From Mark] Is this it for the Greenback? Will it get weaker from here onwards? Your opinion |
8:22 | [Comment From Guest from Seattle] Let's not forget, many economist strongly believe Europe is MUCH more worse off than the US and doing MUCH less about their economy than the US. I agree long term the dollar will remain King. |
8:23 | Nick Nasad - CMS: as we saw the last two months, when things got panicky and investors turned risk averse they fled to the dollar for safety.. that makes me think that the Dollar is not done being the world's global reserve currency. though it may be pressured it still retains a sense of safe haven that will help it through 2009 (as someone mentioned before, we are not out of this crisis yet) |
8:23 | [Comment From yogesh] i think 1-35 is a resis for euro |
8:24 | Nick Nasad - CMS: yes, seems like that is the last big of gains the pair may see today. its a nice psychological level, so lets see if we start seeing a pull back |
8:24 | [Comment From Lanre] Eventually lowering the cost of borrow... will that not lead to the same situation. Bad companies need to pass out naturally and be replaced by well run and profitable ones |
8:25 | Nick Nasad - CMS: this is tough to do with huge banks that are intertwined with each other through a globalized system of products. |
8:26 | Nick Nasad - CMS: the failure of lehman brothers for instance led to a huge market panic.. |
8:26 | Nick Nasad - CMS: so as a policy maker you have to walk a fine line.. |
8:26 | [Comment From Guest] what's the target this night on your opinion ?????? euro |
8:27 | Nick Nasad - CMS: ok everyone i am running out of time |
8:28 | Nick Nasad - CMS: I think we can expect a pull back to 1.333 |
8:29 | Nick Nasad - CMS: for eur/usd prior to the european session, but its hard to predict things after such a volatile day, instead i would watch your charts and see how today's action changed your technical analysis, or what new information you may have gleamed from your technical tools. |
8:29 | [Comment From Mark] Thanks Nick for your time. It was knowledgeable. |
8:29 | [Comment From Guest] thank you Nick! you are the best.. appreciate you |
8:29 | Nick Nasad - CMS: thank you for the kind comments |
8:29 | FXstreet.com: I would like to specially thank CMS Forex, today’s sponsor, for their support. Open a live account with CMS with a low minimum initial deposit of $200 now. Use the following links to follow up about today’s main market news. |
8:30 | Nick Nasad - CMS: and with that, i would like to wish all of you a good rest of the week and success in your trading. |
8:30 | FXstreet.com: It's time to sum up Today's live coverage! The Fed have decided to leave interest rates unchanged at 0.25% and will buy Treasuries and more MBS. The results of such a news provoked big movements in the Forex markets, especially the USD crosses. |
8:31 | FXstreet.com: We would like to thank to Nick Nasad for his participation today. It has been a great pleasure to have you today with us! |
8:31 | Nick Nasad - CMS: thank you very much, its my pleasure |
8:31 | FXstreet.com: Thank you all for joining the live coverage today! I hope to see you all again in the next live coverage! |
8:32 | Nick Nasad - CMS: bye everyone, and thank you for the kind comments and your particiaption and questions, see you next time! |
8:32 | [Comment From Lanre] Thanks |
8:32 | [Comment From Guest from Seattle] Thanks Nick |
8:32 | [Comment From wayne] great!...so this is done for every interest rate coverage??? |
8:33 | FXstreet.com: We will do another Live Coverage next week... for the US GDP data! On Thursday the 26th! |
8:34 | FXstreet.com: Thanks Nick and everyone for your great participation today! Bye for now - See you next time! |
9:04 |  |
Hi there, Not sure that this is true:), but thanks for a post. Thanks Dirnov
Posted by: Dirnov | 03/20/2009 at 15:15