FOMC RATE DECISIONS & US DOLLAR VOLATILITY: EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, USD/CHFForeign exchange merchants ou
FOMC RATE DECISIONS & US DOLLAR VOLATILITY: EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, USD/CHF
Foreign exchange merchants ought to be on excessive alert every time there’s a Federal Reserve assembly on deck judging by historic US Greenback volatility surrounding a FOMC rate of interest resolution. Information pulled on spot EUR/USD, GBP/USD, USD/JPY, USD/CAD and AUD/USD since 2008 reveals that USD worth motion is especially elevated surrounding a Fed financial coverage replace.
In actual fact, the common change (absolute worth) within the 24-hours earlier than and 24-hours after a FOMC charge resolution is noticeably greater throughout the main US Greenback foreign money pairs listed within the desk beneath when in comparison with common change on any given day.
FOMC RATE DECISIONS & AVERAGE US DOLLAR PRICE CHANGE (ABSOLUTE VALUE)
One other technique to replicate US Greenback volatility round repeatedly held Fed conferences is by capturing the each day buying and selling vary on a FOMC resolution day and evaluating it to its respective 30-day common true vary (ATR). As soon as once more, we discover that the US Greenback usually experiences above regular episodes of volatility in response to FOMC charge selections.
EUR/USD PRICE VOLATILITY & FOMC RATE DECISIONS
GBP/USD PRICE VOLATILITY & FOMC RATE DECISIONS
USD/JPY PRICE VOLATILITY & FOMC RATE DECISIONS
USD/CAD PRICE VOLATILITY & FOMC RATE DECISIONS
USD/CHF PRICE VOLATILITY & FOMC RATE DECISIONS
AUD/USD PRICE VOLATILITY & FOMC RATE DECISIONS
The end result of the evaluation is similar regardless of how the information is crunched to replicate US Greenback volatility surrounding a FOMC charge resolution: the central financial institution’s financial coverage updates serves as a severe catalyst for USD worth motion. That stated, foreign exchange merchants ought to completely contemplate implementing stringent threat administration methods when buying and selling the US Greenback round a Fed assembly – like putting tighter stops or buying and selling smaller place sizes.
FOREX TRADING RESOURCES
— Written by Wealthy Dvorak, Junior Analyst for DailyFX.com
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