Tues/Wed FOMC meeting would be pivotal, no rate change is expected at this time,
Ramifications for the U.S. Dollar Interest rate hike : The US dollar generally rallies on the back of an interest rate hike because the hike increases the yield offered by US assets. This attracts foreign investment into the US which tends to be positive for the dollar. The strength of the reaction will depend on how much the market has already priced in the decision as well as the whether the FOMC statement hints at more rate hikes to come.
Interest rate cut : An interest rate cut tends to be perceived as bearish for the US dollar because the cut reduces the yield offered by US assets. The perception is that the economy has weakened enough that the Federal Reserve is forced to either reduce monetary tightening or increase the stimulus in the market to reignite growth. The strength of the reaction will depend on how much the market has already priced in the decision as well as the whether the FOMC statement hints that more rate cuts are to come.
Rates Left Unchanged : The reaction of the US dollar will depend upon whether the Fed is pausing after a prolonged tightening or easing cycle or has been pausing for some time. If it comes after a tightening cycle, it would be perceived as dollar bearish. If it is after an easing cycle, it would be perceived as dollar bullish. If they have been pausing for months already, the reaction would probably be more neutral. http://www.fxwords.com/f/fomc-rate-decision-united-states.html market action during Fed day http://www.mypivots.com/articles/articles.aspx?artnum=11
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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