21 April 2012 02: 43 GMT after the meeting of the FOMC on Wednesday, the Federal Reserve is set to release a litany of communication, the press conference of Bernanke, President of projections of interest rates and of economic forecasts. These statements will provide ample markets the opportunity to question the future of us monetary policy, with potentially significant effects on the US Dollar.
The last few months, the greenback has become much more sensitive to the expectations of the direction of Fed policy. With the Central Bank betweencontinued support policy flexible and a ton more bellicose in alternation, the greenback saw an increase in congestion. As shown in a daily Dow Jones index map - FXCM Dollar, the Dollar was trading in a group more and more narrow since mid-March, unable to enter in support to the 9,900 level or slope resistance line clearly in decline.
Graph generated by the author using FXCM Netdania
In addition to feeding the congestion of the dollar, greater attention to this "tightening against the relaxation" debate has fueled the belief that a significant policy change is on the horizon. However, the US Dollar traders should resist the temptation to assume that any major change - either in the sense of loosening or tightening - is imminent.
A useful reference point is the position of the monetary policy of the vote held this year and 2013. By examining the statements, speeches and documents of vote from the 4th quarter of 2011, we can draw FOMC prejudice as follows:
Map generated by the author based on January and March FOMC Minutes, Bloomberg, NY Times and Reuters news articles
A first to look at the map reveals that the FOMC continues to exhibit a bias in the overall too consensual. In fact, the rotation to the vote of the members later this year should confirm this trend still further, with the more hawkish current Member - Jeffrey Lacker the Richmond Fed - waive its right to vote. Since Lacker was the only member by calling explicitly before hiking interest rates the current chronology of late 2014, we can expect low interest rates for the Fed to keep pledge. Reduction on a large scale in the balance sheet of the EDF 2.9 billion unlikely, therefore, over the period 2012-2013.
The statements of the Dove camp, therefore, will weight much longer advance. But recent developments have suggested that this group is more likely to more drastic measures relaxation as it was in the 4th quarter of 2011. On the one hand, there was much less explicit proposals during the first quarter to expand purchases of the Fed; Eric Rosengren the Boston Fed remains the only one to have made such a proposal concrete in the more recent months. John Williams, the President of the San Francisco Fed, even suggested a "likelihood reduced need to additional stimulus" on April 4.
Overall, the positions of the members of the FOMC suggests that the status quo is to remain, this year and in 2013. Of course, the greenback will continue to vary the economic data and statements of the expectations of the market form officials Fed monetary policy changes. Unless a serious decline of the US economy, however, traders should not expect speculation on Dollar movements see confirmation in the radical political real action of the Fed.
