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    The market is waiting for the Fed’s decision

    Yesterday the market continued moving without any certain idea, advancing fragmentary. Players solved their local tasks for each currency pair. Very few were interested in the common currency on the eve of FOMC session. Even weak American statistics couldn’t help – retail sales and producers’ prices were weak, but production activity of NY. Japanese yen improved after the Bank of Japan decided not to introduce new incentives. Trade currencies passed positions following correction of energy prices. British pound passed its positions considerably after publication of surveys, which showed approximate equality concerning exit from the EU, herewith a slight advantage is still euro sceptics’ hands. In general, dollar’s index remains practically unchanged. 
    Today everything is in the Fed’s hands. Market prospects for nearest days and even for longer period depend on FOMC decision. Only increase in rates will become an unconditional support for dollar, still, this variant is the least likely in terms of economic situation. However, we’d better to warn that this option is still possible and such decision of FOMC will arrive out of the blue, causing strong movements in the exchange market. Prolonged pause in the Fed’s action will be the most probable result, at least until the next session. There much will depend on Janet Yellen’s comments on outcomes of the session. She may try to perform “toughly”, confirming stability of course for monetary policy tightening, and expressing confidence in prospects of US economic growth. This would help dollar bulls to recapture the initiative. Another question is whether the market will believe in it in general. Now the cycle of publication of economic indicators faces hard times – they aren’t as encouraging now as week or two ago. Today at the beginning of American session series of important indicators will be published – laying of new houses, consumer inflation, and industrial production. If the data are weak, then dollar can fall before FOMC decision. At least, forecasts are contradictory. 
    Trade tactics:
    Now we aren’t going to take a risk and recommend to stand aside till FOMC decision. We find it difficult to tell something about probable reaction of the market to outcomes of the session. It is possible that the movement will be as contradictory and strong as after the ECB decision. 
    Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information. 

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