Wicked Wednesday

Good Morning Traders
Today could mark the most important day for global equity markets as we wait to see the outcome from the two day FOMC meeting followed by the Bernanke press conference. There has been a lot of speculation over the last couple of weeks that we may see the FED deciding to cut back on its agressive monetary easing programme but lie rest assured the market activity this week alone would suggest otherwise.

Yesterday we had another aggressive move to the upside across global equity markets and it was significant that we did not see any selling pressure into the closing bell. We have all seen the aggressive level of volatility over the last couple of trading sessions with the DOW recording triple digit moves in six of its last seven trading sessions this can be directly linked to the uncertainty of the FED's decision this afternoon.

As a trader we must be aware of the equity market movement in the build up to today's meeting in order to get a good understanding of which direction we might move to. The recent rally in the equity markets highlights the fact that investors are expecting no tapering so if this decision is announced don't expect to see too big of a move as it will have been largely priced in. The danger I see is the press conference that takes place after the announcement, Bernanke will definitely be questioned in a roundabout way as to whether 'Tapering' is likely over the coming months and any commentary to suggest this will inevitably see the market give up some of its gains.

In terms of the FX market we saw the EURUSD pair breach the 1.34 handle for the first time since February and the pair now trades just below the 1.34 handle from its morning high of 1.34100. The USDJPY has lost direction and is well off its highs but is hoovering around the 95 level. As we know the BOJ have tried to weaken the JPY but the screws are beginning to come un-done and it will be interesting to see if they step in again and increase their existing easing policy of 75trillion a month.

In conclusion, we are expecting a quiet morning session, there could be a few small swings prior to the announcement and expect to see severe volatility sometimes irrational during the press conference, but we are expecting to see no change in the QE level and maybe some talk of potential tapering towards the end of this year if economic data reaffirms their decision.

Happy Trading
@lowkeycapital