Forex Broker – FOMC announcement to stir markets

Forex online tradingForex Broker attention will be aimed at the FOMC press conference taking place today, at 18:15 GMT.
Analysts are predicting the Fed will extend its current bond-buying program to help in the U.S economic recovery deterioration, as shown in the latest economic figures. If true, the Euro could see additional gains during the evening session, just as it did yesterday despite German ZEW economic sentiment suffering a sharp drop.
Of course, all the news is creating a volatility environment regarding the USD, which is facing losses against its main currency rivals. The greenback fell more than 50 pips against the Canadian Dollar during the European session, going as low as 1.0180, and 40 pips against the CHF, reaching the 0.9491 mark, before experiencing a minor upward correction in the afternoon.
“Forex broker forecasts indicating the Fed decision to extend its current bond-buying program will increase volatility and could lead to further dollar losses. In addition, any possible mention of new quantitative easing measures may have an effect on the greenback for the rest of the week“, explained a forex trader.
Forex Broker analyst Henry Lui agrees. “Today, Bernanke could also provide further elaboration on whether to QE3 or not QE3, but is important to keep in mind that operation Twist is expected to finalize this month, so assuming that there won`t be any pauses between easing, FOMC may delay the announcement for some forms of QE next month, making today`s meeting a bit less likely surprising”.
But not all specialists are on the same page. A report from the WSJ states that “The market has done what any additional Fed monetary easing would maximally accomplish, lowering interest rates to induce more borrowing and increase economic activity. But is not just slowing economic growth and job creation here the reasons why rates are so low. Fear is taking over Europe because of the debt crisis, and that fear is causing distortions of capital flows that push us out of the mainstream of market behavior”.
“QE3 or not QE3? The Fed has already done its share, but many other parts needed for job creation and economic growth, including the need for a stable global financial system, are not working efficiently” concludes the report.
For the time being, forex broker experts are warning that any gains the Euro makes could be short-lived, especially if the financial situation in Spain and Italy deteriorates even more, and the Greece new coalition makeup keeps being delayed.
Having said that, and with the widely expected economic growth-stimulation news from the Fed, the common-currency could see gains this afternoon. Any decision by the Fed could lead to gains for riskier currencies like the Euro.