Fed keeps Rate unchanged! --> 2 trades --> $1860 profits
5 min Emini Nasdaq 100
Hi,
Today is a quiet day before the FED announcement,,, I did not even bother looking at the market.. This morning I was pumping iron at the gym in my home...
As expected.... market volatility picked up as we neared 14:15 ... Market fell immediately when news that FED is leaving rates at 5.25% came out.. I shorted 1 contract at 1965 and another 2 contracts at 1955...
I was in the trade around 30 minutes when price started to turn up... and I instinctively knew the market might turn tables... I reversed my position ( by buying 4 contracts at one go, this netts of my shorting of 3 contracts and leave me 1 contract long) when price hit 1952 which is pretty near the resistance level set by the morning session...
I longed another 2 contracts at 1960 when price appeared to be confirming my trade.. Indeed price momentum was strong as it broke the highs during the morning session and I exited only at 1982 with profits of $1860 in total.
Fundamentals
Although Federal Reserve Chairman Ben Bernanke and his central bank colleagues acknowledged challenges that have intensified since their last meeting in late June, they nonetheless expressed hope that the economy will safely make its way.
The policymakers also clung to their belief that the biggest potential danger to the economy is that inflation won't recede as they anticipate.
Against these economic crosscurrents, the Fed left an important interest rate at 5.25 percent on Tuesday. In turn, commercial banks' prime interest rate for certain credit cards, home equity lines of credit and other loans -- would stay at 8.25 percent.
The central bank's key rate hasn't budged for more than a year. Before that, the Fed had raised rates for two years to fend off inflation.
The Fed policymakers didn't signal that a rate cut -- as an insurance policy against undue economic weakness -- would be imminent. Analysts believe the Fed probably will leave rates alone at its next meeting on Sept. 18. But economists and investors think the odds are growing that the Fed might lower rates by the end of this year, if the economy shows signs of faltering and if inflation isn't worrisome.
"Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses and the housing correction is ongoing," the Fed said. "Downside risks to growth have increased somewhat," it added.
Even so, policymakers stuck to a forecast that the economy is likely to expand at a moderate pace in coming quarters. They also said they expected "solid growth in employment and incomes" -- vital ingredients to the country's economic health.
The Fed was faced with a delicate dance, analysts said. To maintain credibility, it needed to acknowledge recent market gyrations, fears about a worsening housing slump and worries about a spreading and painful credit crunch. At the same time, it needed to send a comforting message but not be viewed as overly optimistic or pessimistic.