How To Trade FOMC Rate Decision Today? - 6/15/2016
We don't know whether Fed is going to raise or hold today but only thing we are looking for is to buy some Australian Dollar ( AUD/USD ) and New Zealand Dollar ( NZD/USD ).
One of our AUD/USD trade laid out here is in progress and after taking half position off at 0.7075 yesterday, we will be either totally offload some more if it touches 0.7400 today and will be square if it goes down below 0.7340 again.
Here is our rationale for buying AUD/USD and NZD/USD.
Case 1: Fed raises the rate
Most unlikely scenario but you never know ! In that case, dollar will shoot up brining everything down initially. Observe the price action and buy AUD/USD as close to 0.7000 or sub 0.7000. Because if Fed raises rate then it will be a kind of one and done scenario which will eventually make US dollar weaker later. And in any circumstances, they can't beat the rate differential against AUD and NZD. In such low ( or negative ! ) interest rate environment, it don't need a genius to figure out where the money will be flowing.
Case 2: Fed remains on Hold
There are sub scenarios with it e.g. hold and hawkish & hold and dovish. But without being confused, just buy AUD & NZD from good levels. In this case, dollar pairs may just race higher and since it's most likely scenario, we may place buy stops depending upon where these pairs are trading.
One of our AUD/USD trade laid out here is in progress and after taking half position off at 0.7075 yesterday, we will be either totally offload some more if it touches 0.7400 today and will be square if it goes down below 0.7340 again.
Here is our rationale for buying AUD/USD and NZD/USD.
Case 1: Fed raises the rate
Most unlikely scenario but you never know ! In that case, dollar will shoot up brining everything down initially. Observe the price action and buy AUD/USD as close to 0.7000 or sub 0.7000. Because if Fed raises rate then it will be a kind of one and done scenario which will eventually make US dollar weaker later. And in any circumstances, they can't beat the rate differential against AUD and NZD. In such low ( or negative ! ) interest rate environment, it don't need a genius to figure out where the money will be flowing.
Case 2: Fed remains on Hold
There are sub scenarios with it e.g. hold and hawkish & hold and dovish. But without being confused, just buy AUD & NZD from good levels. In this case, dollar pairs may just race higher and since it's most likely scenario, we may place buy stops depending upon where these pairs are trading.
