Here’s my 2p’s worth on the Fed meeting. Both Mike and Adam have been very astute in their previews. Mike has given his view on the immediate run up and the possibly reaction after and Adam has given the “surprise” scenarios. I’m going to plant myself bang in the middle.
The Fed has nothing to give it cause to taper and nothing to give it cause to increase QE. they’ve been given a free ride this month with the shutdown and that also buys them some waiting time going into November while the data catches up. The one thing that they need is time out from under the microscope and Washington has handed it to them on a plate. Instead of having to justify the data since the last FOMC they’ll simply point to the shutdown and say that they need to wait until they get all the data.
They also have free reign to have a pop at the politicians for potentially putting the recovery in jeopardy. They may not play this card right now but uncle Ben will have it tucked up in his top pocket for another time.
I think Adam is correct in saying that they may say that the June plans are still in place but have shifted slightly due to Washington but other than that it’s business as usual.
As Mike pointed out I think the market is covering itself rather than trading potential outcomes. As we saw from today’s less than inspiring data, the market was happy to take up any falls in the dollar and we may see another bout of covering in the minutes leading up to the decision.
So from my point of view I’m going to be sitting on the fence for this one. The dollar may be worth a short and I’m small short at 97.86 from yesterday which I’ll hold. In a scenario where there is no material change to rhetoric I believe the buck goes back south towards the 97.00 level.