Forex traders have been looking ahead to today, as today is the day of the much-anticipated FOMC meeting and the expected announcement of the second round of quantitative easing from the US Federal Reserve.
At this point further easing looks a certainty but the question is how much and when as well as the statement that accompanies the announcement. Expectations currently are that the Fed will announce around $500 billion of Treasury purchases over the next 6 months as well as an indication that that amount will be increased if necessary.
Much of the past couple of weeks has seen sideways trading in the forex markets as traders position themselves and wait for the announcement but the past couple of days has seen renewed dollar weakness, especially against the higher yielding commodity based currencies. It remains to be seen as to how much of today’s meeting has already been priced in to the market and whether the Fed do more or less than anticipated.
Movements away from what is expected may move the markets in either direction but without doubt the trend is very much against the US dollar at present and further moves are more likely to be in the direction of the prevailing trend.
The Fed is expected to announce its decision at 2.15pm today, 6.15pm UK time.