In my 4+ years of FX trading, I cannot remember a Federal Reserve meeting preceded by so much anticipation. In a nutshell, the market is bearish the U.S. economy based on what it considers a series of negative data releases. Despite that it sees recession as a certainty, it wants to make sure that big brother Ben Bernanke and the other Federal Reserve Governors are of the same opinion. I am now anticipating a cut to 5.00% with a cautiously optimistic tone in their statement.
Yesterday, I bought the USD/CAD @ 1.0275 in expectations of a bounce. When the bounce didn't materialize, I closed out for +10 pips of profit. I didn't see much sense in being long the pair before the Federal Open Market Committee meeting today. Last night, during the Asian session, I went long the AUD/CAD after a rumor about some Australian banks asking the Australian central bank for help downed the Australian dollar. I would rather have taken this position after the Fed meeting today since the pair is susceptible to carry trade liquidation but didn't want to lose out on an opportunity to buy at low prices. I'm not too attached to the trade since my expectations of much lower oil in upcoming months have become less certain over the past few days.
