| Fed Interest Rates Decision | (09/23/2009) |
| 6:58 | FXstreet.com: Information and opinions contained in this live coverage session are for educational purposes only and do not constitute trading recommendations.
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| 6:59 | FXstreet.com: Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts. |
| 6:59 | FXstreet.com: Today’s sponsor is CMS Forex. |
| 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 shortly. 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 | 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 | Nick Nasad - CMS: Hello everyone, and thank you FX Street for having me on again |
| 7:02 | Nick Nasad - CMS: Today's Fed meeting is important as we are at a bit of a crossroads in the currency markets. |
| 7:02 | Nick Nasad - CMS: Following a summer where consolidation was the main theme, we have seen the Dollar fall to one-year lows against the Euro |
| 7:04 | Nick Nasad - CMS: The Fed decision can hurt or help the Dollar. If we see a statement similar to last month, with perhaps an acknowledgment that the economy is showing signs of recovery, but no talk of an exit strategy from low interest rates, then the overriding theme of dollar weakness should continue.. |
| 7:04 | Nick Nasad - CMS: A hawkish tone would result from language that the economy is recovering and that excess stimulus and capacity in the system will need to be addressed. |
| 7:06 | Nick Nasad - CMS: I don't see much chance that the Fed will move away from their language that they will keep interest rates low for "an extended time" but how they approach ending their stimulative measures, like asset-purchases and Treasury purchases will be the key. |
| 7:06 | Nick Nasad - CMS: i will get to some questions, after we post a poll.. |
| 7:06 | FXstreet.com: Thanks Nick
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| 7:06 | FXstreet.com: We will now hear the opinion of everyone then... through this little poll |
| 7:07 | what USD reaction do you anticipate after the decision today?USD soars against the other majors. USD gains slightly. USD shows sharp decline. USD shows less than expected dip. USD wildly swings up and down. USD does not show much reaction (low volatility). |
| 7:07 | Nick Nasad - CMS: So in short, a more status quo statement could intensify pressure on the U.S. currency or at least leave recent selling pressure unchecked while any talk of an "exit strategy" has the potential to help the greenback. |
| 7:10 | [Comment From Hi Nick]
where do you see euro ?is it time to build sell positions 14800-50-70 thx |
| 7:12 | Nick Nasad - CMS: since breaking out of its consolidation patter to end August, we have seen a rather strong rally in the EUR/USD, but that alone shouldn't make one think that we are due for a fall.. The rally since September 8th has been rather paced, in that we have seen retracements (like the three session downmove between sept 17-21) that is followed by futher gains. |
| 7:12 | Nick Nasad - CMS: The situation remains that the global recovery seems to be on track, fundamental data is improving, as are stocks. With no mention about raising rates, the factors are aligned for further Dollar weakness. |
| 7:14 | [Comment From nejo]
Hello nick!Do you think eur-usd could resume uptrend after fed desicion.my target is 1.4840 resistance |
| 7:15 | Nick Nasad - CMS: looking at the swing low to high for this week, we had a retracement to almost the 50% level, with the 1.4750 area a strong psychological level. So far, the greenback has managed to stay above that level, though we are in a bit of consolidation now. |
| 7:16 | Nick Nasad - CMS: a better assessment of the economy can help bolster the greenback, |
| 7:17 | Nick Nasad - CMS: however, that is likely priced in. ok, the release is out, and we have a big jump initially in favor of the Euro |
| 7:17 | Nick Nasad - CMS: "With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time." |
| 7:18 | Nick Nasad - CMS: "The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. "
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| 7:19 | Nick Nasad - CMS: there does not seem to be much change here to the Fed's program, and no mention of an exit strategy |
| 7:19 | Nick Nasad - CMS: so, we are having further greenback weakness as as result. |
| 7:20 | [Comment From Anthony]
With the intense selling pressure that we have seen and focus on future inflation how is it possible that the FED does not focus on an exit strategy? |
| 7:22 | Nick Nasad - CMS: The Fed doesn't see inflation as a concern yet, and that is being borne out in inflation readings like CPI. But, even with inflation a concern, the Fed is being very cautious about hinting at interest rate increases. For one, expectations ofor a higher federal funds rate will push up yields on 10-year Treasury notes, increasing mortgage costs. Second, members on the FOMC might also be concerned about embracing the stronger growth story too quickly, which could lead the market to price in sooner rate hikes and tigher financial conditions than they would like, |
| 7:23 | Nick Nasad - CMS: So, behind closed they are likely concerned, but they do not want to send the signal to the markets right now that rates are going to be going up. |
| 7:24 | Nick Nasad - CMS: pretty strong reaction in the USD/JPY pair |
| 7:24 | [Comment From pbp]
this may sound dumb, but who is keeping the dollar weak, i know for a fact a lot of folks are in long positions in say the chf pair |
| 7:25 | Nick Nasad - CMS: the correlation is interesting as US stocks are moving higher, which we have seen recently is helping the Yen and not the greenback, as the US Dollar is becoming the main funding currency for carry trade. |
| 7:27 | Nick Nasad - CMS: pbp, what we are seeing is that the greenback has lost its allure as a safe haven with the global economy beginning to recover. That means we may be moving away from the back and forth risk appetite/risk aversion story and traders are betting that the greenback with its low interest rates will continue to be pressured. |
| 7:27 | [Comment From Malcolm]
Hi...What are your comments re cable, I see we re still bearish long term on the cross...(1.6567 around) |
| 7:29 | Nick Nasad - CMS: The Pound has been an interesting currency recently as there are still some pretty big concerns around the economy. The GBP/USD pair did bounce up off an importnat long term support level (connecting lows from Jul 7th and Sept 2nd) |
| 7:29 | Nick Nasad - CMS: looking at the pair's price action since hitting 1.70 though, we are seeing what could be a very long term head and shoulders pattern emerging with that support line as the neckline. |
| 7:31 | Nick Nasad - CMS: Following the decline recently in the pair from 1.6740 to 1.6140, the recent upmove is about a 50% retracement and i see you are targetting the high from last thursday. |
| 7:32 | Nick Nasad - CMS: I think greenback weakness may get it there, as right now the fundamentals are not very supportive of the Pound. |
| 7:33 | [Comment From raulin]
market needed to see Fed saying there was going to be an exit to QE it did not happen |
| 7:34 | [Comment From X-men]
Fed no exit.. because they don't see any strong reason to make an exist strategy, it is too soon yet to believe the worse is behind us... they had to hang measures to create the condition of exit strategies... |
| 7:34 | Nick Nasad - CMS: very good comments here. |
| 7:36 | Nick Nasad - CMS: The Fed's concern is nursing this recovery, and higher rates as we mentioned will hamper their efforts to stabilize the housing sector, |
| 7:37 | Nick Nasad - CMS: However, that presents the possibility that the Fed will begin soaking up the extra liquidity it has put into the credit markets too late, and create concerns over inflation. its a double edged sword, with the Fed remaining cautious and putting inflation concerns off. |
| 7:38 | [Comment From pbp]
Thanks. How shall the reaction of the feds to the "behind closed doors concerns" weakened dollar be seen by amateur traders like myself? In other words what signs shall I see that the majors such as the EUR and CHF are about to reverse. |
| 7:38 | [Comment From lucian]
can we expect a recovery in usd/chf and a drop in aud/usd? as they did one sided moves quite long now |
| 7:42 | Nick Nasad - CMS: From a fundamental perspective, the decline in the Dollar has only a few ways of stalling.. We are going to have your garden-variety pullbacks and retracements of course, but unless there is another big shock to the financial system (banks failing, etc) or indications by the Fed that they are ready to raise rate, the greenback shoudl remain pressured.
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| 7:43 | Nick Nasad - CMS: now with the swiss franc, its interesting that the two currencies have switched roles, similar to the USD/JPY, where risk aversion used to favor the Swiss Franc and Yen while the greenback would weaken.. Now we are seeing alot more US carry trade. |
| 7:44 | Nick Nasad - CMS: For the Swiss Franc though, the Swiss National Bank has reiterated its intent to keep the currency from strengthening against the Euro, that can translate to the Dollar as well, especially as we approach the parity level.
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| 7:44 | [Comment From raulin]
the Fed does not want to tank the markets they are scared of that . |
| 7:46 | Nick Nasad - CMS: raulin, that is a very good point, and one i wanted to mention. With the Dow approaching 10,000 it would be a shame to ruin that.. huh..? |
| 7:47 | [Comment From Ylber]
In EUR/USD there is a double top around 1.4843. Could this be important, considering bull direction or just a trap for opposite of big dogs? |
| 7:49 | Nick Nasad - CMS: im not sure if its a trap, but we have definetly had a strong rejection of the initial move, with the pair returning to its levels prior to the FOMC announcement. Really, there wasnt much new from the Fed, and though that caused some initial appetite to sell the Dollar, its wasnt enough, yet, to let the Euro keep its gains.. aka, traders may have priced in today's announcement (since it was pretty close to keeping the status quo in terms of policy), minus the more knee-jerk reaction. |
| 7:51 | [Comment From silv500]
If the Dollar was so weak, EUR, AUD and NZD should have rised a lot more |
| 7:52 | Nick Nasad - CMS: silv, thats a good point,.. |
| 7:53 | Nick Nasad - CMS: what i would take away is that the Fed announcement hasn't changed to underlying dynamics of the market |
| 7:55 | Nick Nasad - CMS: The Kiwi has been a very strong performer against the dollar recently, but after strong gains yesterday and in the wake of its better than expected GDP, it may be a bit overbought at this point. |
| 7:56 | Nick Nasad - CMS: The Aussie is having a hard time penetrating the 0.8790 area, but that can change pretty soon. In other words, if you have a trade set-up looking for a break of resistance, expecting the Aussie to keep rallying, keep watching for it. The Fed announcement was not the event to push it above that level. |
| 7:57 | [Comment From Bob]
this seems to be what everyone expected, but at the same time it is also the end of the day for trading in NY so we might see a big move tomorrow or in the asian session |
| 7:59 | Nick Nasad - CMS: Bob, you have a good point. US stocks rose following the news, but are already giving up some of those loftier gains. When traders get a chance to digest the statement, those expecting a more hawkish one will be disappointed. |
| 8:00 | Nick Nasad - CMS: traders in other countries* |
| 8:01 | [Comment From silv500]
USDCHF going to 1.06 , range bound for some weeks? |
| 8:03 | Nick Nasad - CMS: For a swing position trader, if the pair find support following this downward channel, it would seem logical that that is a good target as there was no retest of that level following its break. The down move was fairly slow and steady, but this week we are seeing a bit of a pick up in volatility. We are coming to the bottom of the EUR/CHF range as well which could give teh Swiss Franc pause in strengthening further. |
| 8:04 | Nick Nasad - CMS: A lower level of resistance for the USD/CHF that was tested, though briefly, was 1.0460 |
| 8:05 | [Comment From Rio]
so? where is GBP/USD heading... I am slightly confused by the swing following the decision... |
| 8:08 | Nick Nasad - CMS: the sing following the decision is likely a bit of noise at this point since the statement was close to what was expected. The thing to look for now is what happens with this recent rally this week. Plotting Fibonacci levels from 1.6740 to 1.6132 (the decline in the pair last week) we see that the rally has stalled at the 50% retracement level, with the intra-day high we jsut say poking above that retracemetn level. |
| 8:11 | Nick Nasad - CMS: that means we are at a critical point for this pair and its very important to monitor where the pair heads. From a fundamental point of view, the recent trouble in the UK financial sector (focusing on Lloyd's), high unemployment, and conerns over the budget deficit can put more pressure on the Bank of England to continue its stimulative measures. The chacne that the BOE would expand its QE program was one of the main reasons the Pound has been weak |
| 8:12 | Nick Nasad - CMS: sorry guys im running out of time so I will take a final question. |
| 8:13 | [Comment From fxdc]
eu seems to be in a narrow channel after the spike,consolidaion before resuming upmove? |
| 8:16 | Nick Nasad - CMS: it seems that the rejection of the move upwards will like you said put this pair into some sideways trading. Look for support at 1.4750 if we see the greenback move lower today, but like i said earlier, today's announcement really doesn't change the underlying dynamics that we have seen in the currency markets. Im sure behind the scenes there is much discussion about exit strategy and when it will be time to soak up the extra liquidity.., however, the Fed does not want to have that discussion in front of the public as right now lower rates and borrowing costs are what they believe is needed to keep the economy supported. |
| 8:17 | Nick Nasad - CMS: allright, that is a good place to stop |
| 8:17 | FXstreet.com: I would like to thak Nick Nasad for his collaboration again today, his comments and insights. I hope you have enjoyed. |
| 8:18 | Nick Nasad - CMS: thank you so much for the questions and comments, and my apologies to those people that may not have had their questions posted. |
| 8:19 | FXstreet.com: We just have time for a quick Wrap up, Nick, about today's Fed meeting...
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| 8:20 | Nick Nasad - CMS: So in closing, today's announcement didnt hold much in teh way of surprises. The Fed, though seeing improvement in the economy does not want to take away the support it has been providing with its low rates and its asset-purchase programs |
| 8:21 | Nick Nasad - CMS: that should continue to pressure the greenback. Look for any hints about higher rates to come from Fed officials in speeches now until we get to next month's FOMC decision. However it seems that the inflation is not seen as a big threat right now by the Fed, and until indicators like CPI turn upwards (annual rates) then they will continue this policy until they feel the recovery is on firm ground. |
| 8:22 | Nick Nasad - CMS: Again, thank you for your attention, and FX Street for having me on.. |
| 8:23 | Nick Nasad - CMS: wish you all the best in your trading, and see you next time |
| 8:23 | FXstreet.com: Nick will be with us again next week for the US GDP Live Coverage, from here again, the homepage of FXstreet.com! It will be on 9/30/2009. Meet you all here next Wednesday then! Thanks!
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| 8:23 | [Comment From Guest]
I would like to thak Nick Nasad for his collaboration again today, his comments and insights. I hope you have enjoyed. |
| 8:23 | FXstreet.com: Thanks to all for attending this live coverage!
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| 8:24 | FXstreet.com: Good trading to all!
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| 8:24 | FXstreet.com: Today’s sponsor is CMS Forex. |
| 8:24 | Nick Nasad - CMS: Goodbye~ |
| 8:24 | FXstreet.com: Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts. |
| 8:25 | 
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Disclaimer: Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts.
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