At 12:30PM EDT, the FOMC announced interest rate policy, holding the benchmark interest rate at the 0-0.25% rate. Operation Twist is to be extended to year-end. At 2:30PM EDT, Bernanke held a press conference. During his statement he noted some key themes:
- Fed will not buy European debt on top the slight amount already
- Compared situation with Japan, where rates cannot be reduced anymore, noting however that there are uncertainty and costs to the non-traditional tools and operations.
- Watching situation in Europe carefully, hoping for improvement but also preparing for fallout and monitoring US exposure to that front. Also consulting European financial leaders through the process.
- Access to credit has been tough
- Employment picture is not improving fast enough.
- As far as QE, it is still on the table, and Bernanke wants us to know he does not feel the Fed has lost ammunition, and is ready to do what is necessary if warranted.
- He also touched on other topics like the fiscal cliff and watching BoE’s new lending program. The latest BoE minutes did reveal a closer vote for QE.
Risk-on has stalled after the policy announcement and press conference. An initial risk-off reaction was followed by a risk-on push that failed to follow through.
The 1H S&P 500 Futures chart shows that the post-risk-event range is roughly between 1356.60 and 1338.75. As we get into the final hour of the traditional trading day in NY (4:00PM EDT), the market has yet to commit to a direction.
Fan Yang CMT is the Chief Technical Strategist, currency trader, and the main contributor to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.