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Preview of the Fed Hike

Marc Taylor

For the first time in nine years the Federal Reserve The Federal Reserve The Federal Reserve The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More ... More is the Central Bank of the United States of America and sets the monetary policy... More is the Central Bank of the United States of America and sets the monetary policy... More is expected to raise interest rates. As a result, it is predicted that the market will be extremely volatile.

US FOMC Interest Rate decision is the main focus of the week.
With the Fed The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More openly talking about an imminent rate hike, we will see as to how far Federal Reserve chair Janet Yellen is willing to go with rate tightening in today’s economic environment.

2:00pm US FOMC Interest Rate Forecast 0.50% Previous 0.25%

Most investors would normally look to buy a currency ahead of a rate hike but in the case of the Fed The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More , its well-telegraphed decision could mean more losses for the greenback The USD is the official currency of the United States of America. It is the largest reserve currency... More . We have already seen investors bail out of CALL positions on USD The USD The USD is the official currency of the United States of America. It is the largest reserve currency... More is the official currency of the United States of America. It is the largest reserve currency... More / JPY The official currency of Japan is the JPY The official currency of Japan is the JPY which is also knows as the Japanese Yen The official currency of Japan is the JPY which is also knows as the Japanese Yen The official currency of Japan is the JPY which is also knows as the Japanese Yen to investors and t... More to investors and t... More to investors and t... More which is also knows as the Japanese Yen to investors and t... More and PUT positions on EUR The EUR The EUR is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More /USD trades as EUR/USD peaked in mid-November and USD/JPY bottomed in early December. And with only one day to go before the historic announcement there is very little chance of a strong pre-FOMC dollar rally.

It is not unusual and often times expected that reversal trending occurs after strong movements such as this. There was significant strength in the dollar in 2015 and as the main event that motivated these trades pass, could allow for reversion (simply a fancy way of saying correction) as expected.

Finally with this year’s end approaching, more investors will be looking to take profits, going flat to reassess their positions after this year’s moves. The dollar’s gains in 2015 will also force investors and funds to rebalance their portfolios. That process will involve selling dollars therefore the USD might rise during the FOMC reports and collapse as an aftershock.

Gold came under pressure early in the week as FOMC member Bullard’s speech further fuelled the case for a rate hike. In addition, US Core Retail Sales and PPI were also buoyant at 0.4% and 0.3% m/m respectively. Subsequently, gold was sold off strongly as capital fled the metal for other safe havens. However, the slide was arrested by a weaker than expected US Unemployment Claims result at 282k (270k exp) and the metal managed to finish the week at $1074.44 an ounce.

Looking ahead, gold is facing a volatile week as the US Federal Reserve is set to ponder the state of the Federal Funds Rate tomorrow. The central bank has been largely tipped to raise the benchmark rate by 25bps which would see the metal under significant pressure. Subsequently, expect to see plenty of sharp swings in the lead up to the news release.

During the FOMC meetings : Support When investors and traders use the term support When investors and traders use the term support When investors and traders use the term support, or support level, they are often speaking about a p... More , or support level, they are often speaking about a p... More , or support level, they are often speaking about a p... More is currently in place for the pair at $1072.11, $1045.96, and $1035.55. Resistance When investors and traders use the term resistance When investors and traders use the term resistance When investors and traders use the term resistance, or resistance level, they are often speaking abo... More , or resistance level, they are often speaking abo... More , or resistance level, they are often speaking abo... More exists on the upside at $1098.63, $1118.38, and $1133.71.

Investors who registered for MaxOptions’ VIP trading activities will receive a call prior to the FOMC reports.

During this call, our team of senior Investment Brokers will provide the trading signals for this Huge Opportunity and will share their opinions on the 2016 forecast for the global economy and capital markets.

The discussion will include perspectives on topics such as:
• The future path of inflation In economics the term inflation In economics the term inflation In economics the term inflation refers to price values that are rising on a regular basis in which t... More refers to price values that are rising on a regular basis in which t... More refers to price values that are rising on a regular basis in which t... More
• Stock market volatility
• Will interest rates rise and by how much?
• Are oil prices likely to rebound?

The conversation will also include views on areas of opportunity for potential growth in profits starting with the FOMC tomorrow, the end of this year and beginning of 2016.
You only have one day before the Big Profits show up.