Question about FOMC

Hey all,

So ahead of FOMC and bank rate, that is tomorrow, is it normal for currency pairs to be a little erratic during this time the day before FOMC? it just seems some pairs are acting a little erratic and I notice this usually around FOMC time, was wondering if that’s just my mentality or if pairs really do act differently before FOMC and bank rate.

Thanks

Yes @jayboii478, but there is no shortage of other factors impacting currencies this week.

It’s not just in your head. FOREX.com analyst Matt Weller summed it up this way in his article earlier this week:

Ever since former Fed Chair Ben Bernanke’s introduced “communication policy” as a tool for influencing markets, the central bank has sought to telegraph its changes in monetary policy well in advance. Assuming the central bank sticks to the script this time around, another 0.25% interest rate hike is a virtual certainty. Indeed, the market-implied odds of such a move are above 96% according to the CME’s FedWatch tool, so an interest rate hike is already “priced in” to current market prices.

That said, the wording of the accompanying statement, the quarterly Summary of Economic Projections (including the infamous “dot plot” of FOMC members’ interest rate expectations), and Fed Chair Powell’s accompanying press conference could all exert a substantial impact on markets. Specifically, traders will be looking for signs that the central bank is growing increasingly wary of rising price pressures, especially in the wake of this morning’s Consumer Price Index (CPI) report, which showed prices rising 2.8% year-over-year, the highest rate in 75 months. If Powell and Company pay more heed to signs of inflation heating up, investors will likely view the meeting as hawkish and increase bets on two more rate hikes this year (September and December).

An under-the-radar event risk from tomorrow’s meeting is the chance that Chairman Powell announces that the Fed will be holding a press conference after every one of its meetings, instead of the current schedule of one press conference per quarter. The market could read this development as hawkish, as it would increase the number of “live” meetings each year…

For me: FOMC means close your chart & take a long sleep.

As i know FOMC is included as high impact news, which sometime influenced on the currency market after news has been released, and before news sometime movement on sideways or flat condition if will there are news high impact like as FOMC will be released, but not always like that, sometime movement already high although before news released but after news released may movemet seems normal and no impact from the news, I think better as early consideration if will there are news FOMC before start trading, some trader choose stay away from the market when there are news high impact will released