The Long 7-Year Wait is Over. The FED Decides Today!By Adam | Wednesday, December 16th, 2015
The whole world is watching the markets today as the Federal Reserve announces the new interest rates at a news conference at 2:30pm EST. Fed chair, Janet Yellen is expected to raise the rates to 0.50% which should see the US dollar rise significantly in the upcoming year.
Yet investors’ opinions vary greatly whether the dollar will survive any rise of interest rates after a 7-year ‘healing period’ which started right after the 2008 financial collapse of subprime mortgages.
In response to what was happening with the US markets at the time of the collapse and more importantly with the US dollar, Yellen’s predecessor, Ben Bernanke, launched a fiscal policy aid that will come to an end today, seven years later to the dot.
Most financial analyst expect the dollar to rise significantly against other currencies which means it will be more expensive to buy dollars and foreign currency will be cheaper. This type of scenario already played out in the history of fed stimulus and similar circumstances. The only difference this time is supposedly a more gradual increase over a longer period of time.
Experts believe the dollar will increase in maximum 0.50% increments but expect overall increase to 2.50% by the end of 2017. This should be good news for the dollar but as the dollar strengthens gold is likely to fall even further.
The common consensus between investors is that gold may suffer further losses as investors rush in to buy bonds and treasuries as main investments. So if you’re into gold trading this might be a good opportunity and if you’re into gold buying you might be better off waiting a few months.
Markets are expecting the Fed’s decision today and it is most likely to send shockwaves through the financial world as investors will be buying and selling at greater than usual trade volumes.
But what can we really expect to see? Is it possible that we will see moves of 100 pips on the currency markets? Many financial experts claim that the reaction to the upcoming and strongly insinuated by the Fed interest rate hike has already been ‘priced in’ in the rising US dollar up to this announcement. Whether this is true or not we still expect to see some major movements in short and long term trading.
If you’re trading binary options to this announcement you might want to consider the High Yield Touch or Boundary options as they can give you 200-350% of your investment. If you never traded these options before, this is the announcement on which to try them.
If you’re a bitcoin investor know that bitcoin has had a negative correlation with the US dollar since its beginning, meaning that if the dollar will rise in value than bitcoin will fall. However, as bitcoin is such a new ‘thing’ it is kind of useless to judge its future performance based on its very short trading history.
Those who follow bitcoin know that there has been a substantial rise in its value in the past couple of weeks but that could be completely unrelated to the interest rate announcement but rather connected to the recent events of its founder being found and the blockchain technology being employed in the financial markets.Published in News & Analysis