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Trading the Post Fed Decision in the Early Dawn

Posted by WorldWideMarkets . on Sep 19, 2013 3:32:00 AM
Today it’s post Fed, It does not particular matter what the data does. Everyone is still digesting the Fed decision to continue buying bonds at an $85 billion monthly pace for now, shocking investors poised for a reduction in the central bank's economic stimulus. Instead, citing tight fiscal policy and higher mortgage rates, the Fed just left stimulus unchanged.
    “The Fed’s unwillingness to begin to end the quantitative easing program, almost uniformly expected by the markets, will excite concerns as to the what governors see in the immediate future that they are willing to risk market dislocations to keep their economic support running." said WorldWideMarkets chief market strategist Joseph Trevisani. "I am really shocked to tell you the truth."
    Investors will now start to look to the two day Fed meeting October 29 and 30 with the statement to be released the second day. Fed Chairman Ben Bernanke said on Wednesday at the post decision press conference that the Fed could still pare stimulus this year though he refused to commit to begin reducing bond purchases this year. Indeed he went out of his way to emphasize there was no preset schedule and much will depend on the economic outlook.
    But whatever dollar trading themes are in place in the near term there are several other pressing matters for the U.S. economy. U.S. President Barack Obama has to name a successor to Ben Bernanke at the Fed. The confirmation will take several months and Bernanke’s term ends in February. More pressing, the White House faces battles with Congress as the debt ceiling has to be raised by mid October to ensure the government can borrow. U.S. Treasury Secretary Jack Lew warned Congress on Tuesday that waiting until the last minute to raise the nation's limit on borrowing could lead to irrevocable damage to the economy.
    And the new fiscal year starts Oct. 1. Republicans are threatening a federal government shutdown in the attempt to attach conditions to funding the budget for the 2014 fiscal year. They won’t win but Republicans in Congress want more spending cuts and the removal of funding for Obama's signature 2010 healthcare law. The long term dollar trading fundamentals are still looking good and the market tends to ignore the political battles in DC but given the amount of focus on this Fed meeting and that it is only 11 days until Oct 1, expect the volatility to rachet up alongside the rhetoric. trading Ben Bernank

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