• The Fed's transcript of its last policy meeting reinforced a shift towards an eventual rate hike
• Neither the modest hawkish shift nor concerns of complacency however triggered a dollar or risk reversal
• 'Status quo' is a powerful market condition that supports risk appetite, congestion and certain trend
See volume behind the majors during the NFPs and ECB rate decision to gauge your trading approach using the free FXCM Real Volume and Transactions indicators.
The Fed's shift away from subsidizing speculative appetite is clear...but perhaps not flagrant enough to turn the soaring equities market and turn the US Dollar to a new bull trend. The hurddle of overriding the market's state of 'status quo' is high. Quiet market conditions, short-term opportunities to sell risk premia (buy dips) and comfort in remaining all-in with the rest of the market is a strong opiate. The sense of drugged complacency certainly held the market through the Fed's minutes despite a firmed timely for QE3 to end, reinforcing a shift towards rate hikes and warning that markets are taking on too much risk. Volatility and risk remain the key to how we trade these markets. We look at these important environmental factors, upcoming event risk and active setups in today's Trading Video.
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