Major Market Movers: The FOMC Week!

Daily Forex Fundamentals | Written by Crown Forex | Oct 27 08 09:04 GMT |

A new week is starting and as we know it is a major week that everyone was waiting for as the US economy takes the lead with the FOMC rate decision and the advanced GDP estimate for the third quarter as expectations are the economy already started to contract! The focus is still dedicated to fears of the extent of global recession as materialization to the notion is starting to be seen as the major industrial nations begin to falter. Last week UK was the first of the G7 to reveal contraction in the third quarter after the turmoil intensified to its peak and governments and central banks globally stepped in to shore off their financial markets and stem the contagion spreading deeply in their economies. Markets are further pricing in an aggressive cut from the Feds this week as the FOMC meets to decide on interest rates. All the bets that were seen a month ago have shifted with continued jitters and volatility in financial market as now a 25 basis points cut is not an option! Future traders are expecting the most a 50 basis points cut with 74.0% while the remaining 26.0% are expected a drastic 75 basis points cut to 0.75% from 0.0% a week ago the week were 62.0% were actually expecting only a quarter percentage point cut! Fears are the maybe the measures adopted and the $700 billion bailout plan is capable of helping the financial sector from total collapse yet that does not alter the fact that the economy is to contract and weaken further ahead of getting better, which also counts on the extent of recovery and collaboration the banking sector is to utilize to reflect the helping hand they received to the American people. This week's flash GDP estimate for the third quarter is also to be of crucial attention as the economy is forecasted to have contacted by 0.5% following 2.8% growth in the second quarter which was supported by the help of strong trade contribution and also the handed tax rebates, that did not last long enough and had the favorable effected needed which lead the American administration consider a new fiscal package to support the people. Today we are looking at the New Home Sales figures for September as expectations are they fell 2.2% to an annualized 450 thousand units from 460 thousands as the market continued to slack. We saw a surprise leap last week in existing home sales as Americans rushed to lower prices to prevent foreclosures as their conditions tightened and also the outlook hinted for further deterioration! The week has major events in store for us and we are only at the tips of another round of high volatility. The rout is undergoing and we are waiting for the sentiment to at least consolidate and provide us with signs of bottoming, yet the selling wave that was seen on Friday for major currencies reflecting the fears and investors risk aversion for more dilemma is to be seen. The G7 has denoted the ongoing crisis as they called the yen's appreciation 'excessive' after it strengthened to a 13 year high versus the US dollar, the unscheduled statement from the G7 came based on a request from the Japanese finance minister who said his government is ready to act as need looming the possibility of a market intervention to halt the yen's rapid appreciation as it lingers around 90.00 levels per dollar! Still though as their economy suffers further the credit crisis their economy and exports add to the slowdown with crippled export market; the odds are slim for an intervention yet they remain a possibility and for that caution is needed as since the turmoil began the G7 nation did intervene in their financial markets to support the banking sector yet surely no currencies market step in was denoted, We continue to stream down days to go in history as the crisis has not come to an end; this week is to be another major even that is to tailor more for us the outlook after officials are nearly running out of ideas to provide markets with to ease the pessimism… Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.