FOMC Meeting & Forex Trading
July 1st, 2009
Learn forex scalping. You should know and understand that certain reports affect the price behavior of forex markets whether you are a beginner or an advanced currency trader. Your number one priority should be to look for what the voting members of the central banks are looking at present. You should focus on what they are basing their decisions to adjust interest rates if you are a serious forex trader.Discover a revolutionary new forex robot.
Learn forex trading.FOMC stands for the Federal Open Market Committee. That’s right, the releases of the FOMC meeting announcements are important as well as the minutes of their last meeting. The minutes are released within two weeks of the last FOMC meeting.
FOMC meets eight times a year to determine the near term direction of the monetary policy. FOMC consists of the seven governors of the Federal Reserve Board and five Federal Reserve Bank presidents.
Wall Street anxiously watches these meetings. Changes in the monetary policy especially the interest rate changes are announced immediately after the FOMC meetings.
Fed’s Beige Book is important. You should watch the report. You should also watch the speaking engagement of the voting members of the FOMC. The other important report that you should follow is the individual Fed District Business Survey. This gives you the clue as to what FED’s intentions are and what its concerns are about the US economy and whether interest rates will be lowered or raised.
The Beige Book is a combination of economic conditions from each of the 12 Federal Reserve regional districts and is named Beige book due to the color of its cover. This report is usually released two weeks before the monetary policy meetings of the Federal Open Market Committee (FOMC).
If the Beige book portrays an overheating economy or inflationary pressures on the economy, FOMC may decide to increase the interest rate in order to cool down the economy and reduce the inflationary pressure. This report on the economic conditions is used in the FOMC meetings to set the interest rate policy. These meeting are roughly scheduled six weeks apart.
If the economy is in recession just like now days and the Beige book portrays economic difficulties, FOMC may lower the interest rate in order to stimulate the economy just like what the FED is doing right now. The other economic report that has a huge impact on the currency markets is the unemployment figures in the shape of NFP report. NFP stands for Non Farm Payroll.
When unemployment is high, the economy maybe weak and its currency may fall in value. The unemployment rate is a strong indicator of a country’s economic strength. Non farm payroll employment tallies the number of paid employees working part time and or full time in the national public and private sector.
There are two versions of the NFP report. One is a weekly report. It is released every Thursday. The other is the monthly report. It is more influential and is released on the first Friday of every month.
So watch out for times that reveal a major change in the interest rate policy, a surprise in the employment growth or a recession in the US economy. We should see the dollar move against other major currencies during such times. This information can help you establish your dollar bias.