The FOMC economic projection and statement came in and left us yesterday with raised eye brows. Today I’m going to talk about how I survived the doller-rocking comments of Fed head, Ms. Janet Yellen yesterday which brought with it the biggest single-day jump on the forex dance floor in six months. First, let’s do a gossip session and let me tell you in 5 sentences how she brought sexy back in Ms. USA.
1- The fed will continue their tapering plan and will reduce asset purchases by $10bn each month, as long as the US economy stays on the path to recovery.
2- The fed expects to see lower than expected growth this year, but they think the U.S. economy will expand more than expected in 2015 and 2016
3- Ms. Yellen decided drop the 6.5% unemployment threshold and said that the economy has a long way to go before achieving full employment
4- The Fed is likely to take a qualitative guidance approach, and might be less specific about economic targets and will take a much closer look at a wider range of economic information before deciding to tighten monetary policy.
5- The fed could consider increasing interested rates and 13 of the 16 FOMC members see a rate hike in 2015. These “hints” caused madness on the forex dance floor and almost gave me a heart attack.
As you know from my previous videos, (I mean, you better be watching all my videos) I cautiously had a long position on AUD/USD and a short position on USD/CHF, basically seeing Ms. USA going down. You could imagine how I felt right at 2 pm EST yesterday when Ms. Yellen opened her mouth and Ms. USA put her hands up like the ceiling can’t hold her.
To quickly remove the damage in my account and to balance things out, I opened a leveraged long position on USD/JPY for two reasons: dollar was going nowhere but up with the excited market sentiment, and Japan was asleep so Mr. Japanese yen would be dragged by Ms. USA wherever she was going. So thankfully, I’m at least not losing money and keeping things under control until the market calms down and we can come up with a new trading strategy.
Q&A Friday is tomorrow, don’t forget to submit your questions on Invest Diva community.
Happy Persian new year!
(Persian, Iranian both the same thing, don’t get fooled by what you learned at school)