Today is the day, if you love volatility. For some traders, especially for day traders, huge swings in the market represents a potential profit, as long as they can scale the direction of the market correctly. It is not only the economic calendar which will quiver the ground today, but also the jaw dropping sell off in the Russian RUB and oil price which is impacting the market. Although, the Russian central bank has modulated the possibility of capital control yesterday, but I have my doubts if the central bank does have any other bullets left to protect its currency from a massacre. On the other side, crude oil is getting butchered and breaking all the support levels like a knife through a butter, and there is no floor insight. From a technical perspective, you could reason that that the zone of $50 could stem the sell off and push the commodity back up.
When it comes to economic calendar, the big elephant is in the room, and it is the FOMC meeting which is going to drive the traders attention and much of the trading action for the rest of the month. So what traders will be looking for during the FOMC meeting will be if the Fed going to be hawkish or dovish. Perhaps, more focus will be towards the statement and the wording of the FOMC, and if the well known phrase considerable time frame will still be esteemed in the court or not.
It is important for investor that they do not avert their gauges during the FOMC meeting and be able to distinguish the noise from the actual message. We do support the view that the Fed will endure dovish tone, and perhaps that could trigger a bounce for the U.S. equities, at least in the short term because wording or chatter only is not enough for the U.S. to save it from the miseries of the falling oil prices and currency crisis which has entered our door steps, not to mention the fragility issues of growth in the Eurozone, China and Japan.
On the other hand a hawkish tone, which again we do not think the Fed will draw from the well of their personal experience, could light up further fire in the uncertainty arena which traders do not like.
The press conference will also be equally fascinating during which everyone will fill up the plate of Janet Yellen with the questions of rout in oil prices, currency crisis, sluggish growth in the eurozone along with the new sanction legislations which president Obama will be singing in the coming days. Therefore, expect immense volatility in the market and a dovish message could trigger some profit taking in the US dollar and push the euro and the U.S. equity markets higher.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.