The purpose of the Central Bank which gets the attention of the world’s most important financial actors is to direct the market. In an environment where communication is very significant, sharing the actions to be realized regarding the monetary policy in the new term and how the banks perceive the markets through the press with the whole world transparently and the answers given to the questions asked through the press can allow an important pricing behavior of the financial assets in the world’s largest liquid market, such as Forex.
The world’s most important central bank, Fed appears here as a playmaker that gets everyone’s attention. This is because the steps the Fed will take regarding the economy affects all the countries’ dynamics directly, from Asia to Europe.
The US Federal Reserve has 8 meetings during the year and four of these meetings are significant for the markets. These four meetings are held in December, March, June, and September. In the related meeting, under the roof of the projections, the expectations regarding Growth, Unemployment, Inflation, and Interest are conveyed. The expectations of the bank’s critical economic indicators both in the remaining time period of the year when the meeting is held and the next year, even for the long term are important to be able to interpret the pricing behavior of the Forex market instruments.
So, how should the Forex traders who buy or sell any financial assets understand and interpret the world’s most important player, Fed?
The US Federal Reserve will be sharing the highly critical data regarding the rest of 2019 as well as convey thoughts regarding 2020 and 2021. The long term expectations will be shared in this meeting as well. (See Picture 1).
The part where the Fed shares expectations regarding Unemployment, Growth, Inflation, and Policy Interest Rate is called the Economic Projection (Picture 1). In this data set, the table where especially the interest expectations take place is called the Dot Plot. (Picture 2) The projections shared with the markets by the Fed, the world’s most important player, are important enough to be able to change the decision mechanism of all the Central Banks. That is why the related results allow an effective image on asset pricings such as Gold, Yen, Sterlin, Oil and S&P500 and especially, Dollar.
After having the FOMC reports, the president (currently Jerome Powell) who manages the world’s most important player Fed shares a message with the markets. The president is responsible for explaining how the Fed perceives the markets currently and how it will take action accordingly. He is also responsible for bringing the markets together with the Fed by answering the press questions and explaining the institutional policies correctly.
The Reports of the Fed meetings, anticipated eagerly by all the market players, can be found on the bank’s website. Here is the link. (Picture 3)
The graphics shared in the article are included in the application to allow a better understanding of the projections taken from the economic projections from the 19th and 20th of March.
To summarise, the traders who want to make a profit from the capital in financial markets make investment decisions by following the decisions of the world’s most important player, Fed, and following the instant pricing behavior, even the middle- long term expectations. Therefore, the meetings held in December, March, June, and September are crucial for traders.