In case you forgot, the December FED meeting is due at 19 GMT on Wednesday. There has been so much talk in the market about this meeting for so long that it feels like it already happened.
We started looking at December right after the last FED rate hike which took place in December last year. A year ago, the FED promised 2 to 4 rate hikes in 2016. But we know that wasn´t going to happen when panic gripped the financial markets in February, so since the beginning of the year, December was the month everyone has been looking at.
Now that day is only a few trading sessions away and the price action has already started to behave abnormally. Although it is almost 100% certain that the FED will increase interest rates the day after tomorrow, the forex market is jittery because the price action in the last few trading sessions before such important forex events always becomes irrational.
Some forex traders open new positions to take advantage of the last few moves, while others close their existing ones to square off before the market explodes either way. After the broad USD strength we have seen in the last two trading days which came as a result of the ECB (yep that´s right, the ECB is moving the Buck now), today the market seems confused.
USD/JPY made a 100 pip move this morning before returning back down, while most major forex pairs have been unwilling to take any direction until a few hours ago. They started moving against the USD a couple of hours ago and the commodity currencies are making the most of it. AUD/USD and NZD/USD are up about 70-80 pips so far.
I can´t see anything that might have caused this move but I´ll have a look around if I have missed anything. The economic data is almost nonexistent today as well, so it is likely that these moves are due to some position adjustment before the FED. Therefore guys, be careful, don´t marry a position and use the "hit and run" tactic.
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