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Forex Report, September 17 2007 |
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The world awaits news from the Fed tomorrow. Consensus finds that we can expect a 25bps rate cut tomorrow, but nothing is certain at this point. Several economists feel that there is still data that supports leaving the rate as is. If the Fed were to take this line, however, the market might worry that they are not taking the real possibility of a recession that seriously.
Conversely, if the Fed were to cut the rate by a half percent, or even more, this could really drop the USD and possibly trigger greater inflation down the line. The market might see this larger cut as a good sign that the Fed will bail them out, but more likely they would see it as confirmation that things are not going well.
Whatever the case, now is not the best time to be heavy in a position. The market will move, as markets surely do, but there is far too much uncertainty at this point to commit to position. There is a lot to learn this week and the best advice is to pay close attention and sit on your hands for a bit. There will be plenty of opportunities to trade after tomorrow.
Happy Trading!!!
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Forex Report