Today is the FOMC Meeting Minutes day. FOMC stands for the Federal Open Market Committee. Every month FOMC Meeting is considered to an important event in the market. In the month of March this year, FOMC Meeting Minutes had one sentence that said FED will soon increase the interest rate made GBPUSD and EURUSD shootup 500 pips in just few hours and then fall back 400 pips in the next few hours. So you can well imagine how much nervous the market becomes when FOMC Meeting Minutes are released.
“Everybody just thinks the minutes are going to be dovish. The minutes always turn out to be hawkish, and then we’ll see what Yellen has to say to right the ship,” Canally said. “The minutes are a month old and the Fed has a whole month more of data to show the economic weakness was transitory.”
Yellen is scheduled to speak Friday at the Greater Providence Chamber of Commerce Economic Outlook Luncheon at 1 p.m. She is not expected to take questions.
“They are desperate to raise rates this year. I think she’ll harp on the usual stuff that (the Fed) is data dependent,” said Canally.
US economic data has not been good this month. So it will be difficult for FED to increase interest rates this year. US Dollar has gained against GBP, EUR and other currencies this week. On Tuesday, ECB issued a statement that it is going heavy on QE. This made EURUSD fall more than 350 pips.
The Bloomberg dollar index, which tracks the greenback versus 10 major peers, climbed a third day. The measure jumped 0.9 percent Tuesday to cap its steepest two-day increase since December 2011. The yen dropped as much as 0.3 percent to 120.99 per dollar and the euro slipped to $1.1095 following two days of losses in excess of 1.1 percent.
If you are a currency trader who loves to trade EURUSD and GBPUSD, you should know that keeping an eye on what the FED, ECB and BOE are doing is very important for you.