What is the FOMC? The Federal Open Market Committee, FOMC, is one of the 3 key entities within the US Federal Reserve System in charge of short-term interest rate decisions and growth of the US money supply according to the everchanging economic outlook.
What are the FOMC’s Goals? Show Info  
Under the directive of the Congress of the United States of America, the FOMC has been charged with 2 very important goals or mandates. The first being the Price Stabilization, which is looked as the stability of inflation, and the other looks into Maximum Employment.

Accroding to the FOMC, Price stabilization, or inflation, is considered to be at the optimal point of 2.0%, any higher or lower could affect the market adversely. Same goes to Maximum Employment as they see that being at 4.5%. However, an obscure 3rd objective is under the FOMC’s mandate and that includes Financial Market Stability.
How do they achieve their goals? Show Info  
The decision of increasing or decreasing interest rates is a joint decision based on to the voting of the 12 members of the committee. Before each FOMC meeting, that usually takes place 8 times per year, the committee members receive written reports from the system staff on past and prospective economic and financial developments. After the discussion of these reports, the committee members and other Reserve Bank presidents turn to policy and finally reach a consensus regarding the appropriate course for policy.
Dovish VS Hawkish Show Info  
The FOMC members are distributed on a scale from Dovish to Hawkish. The dovish tends to be pessimistic and views the economy in need for stimulation; therefore, they tend to decrease interest rates and thus increase money supply.

However, the hawkish are on the other extreme end with an optimistic view of the economy; therefore, they tend to increase interest rates and thus decrease money supply and control inflation.

The remaining policy members include a minority titled the “Centralists”. They usually look at the market and tend to be data driven, focusing on what actually is happening in the market.

Jerome Powell, chairperson of the FOMC and Federal Reserve, is considered to be a in Centralist; however, has a step closer towards hawkishness rather than dovishness.
What are the possible scenarios of FOMC Announcements? Show Info  
The decision of the meeting can be summarized into three main moves: A Hike, A Hold, or A Cut.

A rate hike is a lever that the Central Bank will use to reduce the demand for borrowing by making it more expensive. This has a contractionary effect and is used to help slow down a buoyant and potentially over-heated market and keep within the FOMC’s mandates.

A rate cut, on the other hand, is an action that the Central Bank will take to make borrowing and subsequently spending more attractive. A rate cut is generally used to stimulate an economy that may be having economic and inflationary troubles and, tends to weaken the local currency.

If rates remain unchanged, the focus for traders turns to the “tone” of the FOMC statement, and whether the tone was hawkish, or dovish over future developments of interest rates and the main objectives of the FOMC.
2018/2019 FOMC Meeting Dates Show Info  
As mentioned earlier, the FOMC usually meets 8 times a year. Usually a week before the actual meeting takes place, a media blackout occurs where all FOMC members are forbidden from speaking in public in whatever form until after the result of the meeting has been released. Below is a table for the upcoming meeting dates and what was of the decision of the previous meetings and the market’s reaction. The dates of the Meetings can be found in the below Forex Calendar.
Date (Tentative) Deicison of the Meeting Market Reaction
7-8 November
2018		 Hold at <2.25% USD: Increase
Indices: No Change
Bonds: Decrease
18-19 December
2018
29-30 January
2019
19-20 March
2019
30-1 April/May
2019
18-19 June
2019
30-31 July
2019
17-18 September
2019
29-30 October
2019
10-11 December
2019
How to Trade the FOMC Show Info  
FOMC Decision
Hike Hold Cut

Market Expectation

Hike

 Forex Reaction: USD Strengthens Slightly
US Indices: Slight Decrease
US Bonds: Slight Decrease		 Forex Reaction: USD Weakens
US Indices: Increase
US Bonds: Increase		 Forex Reaction: USD Weakens Considerably
US Indices: Extensive Increase
US Bonds: Extensive Increase

Hold

 Forex Reaction: USD Strengthens
US Indices: Decrease
US Bonds: Decrease		 Forex Reaction: Moves Accordingly to Statement
US Indices: Moves Accordingly to Statement
US Bonds: Moves Accordingly to Statement		 Forex Reaction: USD Weakens
US Indices: Increase
US Bonds: Increase

Cut

 Forex Reaction: USD Strengthens Considerably
US Indices: Extensive Decrease
US Bonds: Extensive Decrease		 Forex Reaction: USD Strengthens
US Indices: Decrease
US Bonds: Decrease		 Forex Reaction: USD Weakens Slightly
US Indices: Slight Increase
US Bonds: Slight Increase
Please note that the above directional suggestions do not take into account the current Geopolitical or Market positioning pressures that could easily cause the opposite to occur. With this in mind, it is always beneficial to keep yourself abreast of the current market conditions when planning your trades.
DAILY MARKET REPORT
Royal Financials SAL Regulated by The Capital Markets Authority No. 15
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