За Търговци

Форекс анализ

Wave analysis

11.10.202317:06 Форекс анализи и прегледи: The FOMC minutes won't provide answers to any of the market's questions

This evening in the United States, the FOMC Minutes will be published. If the event's name includes the word "FOMC" or "Federal Reserve," many automatically consider it important. However, from my perspective, this is a mistaken approach. For example, the FOMC minutes are simply documents that reflect the sentiments of the Board of Governors. They may contain information about how many voted "for" tightening and how many voted "against." But usually, there is little specificity in these documents. They often use phrases like "majority," "minority," and "a certain portion."

Furthermore, the FOMC meeting took place three weeks ago. Over these three weeks, the market has seen several very important reports that could significantly affect the sentiments of the FOMC, allowing it to make more "hawkish" decisions in the future. Reports on inflation are also crucial at the moment. The report for September will be released tomorrow, and this report will be key in determining the new interest rate on November 1. If inflation accelerates for the third time in a row, then in November or December, the FOMC will almost certainly raise the rate by 25 basis points.

Moreover, some analysts believe that the current minutes are already outdated. Three weeks is a significant period, and much economic information has been updated. In reality, many analysts believe the FOMC has a more "hawkish" attitude than the minutes may suggest. Some analysts also note that the minutes may be slightly adjusted, which completely negates their meaning, as these would no longer be the minutes of three weeks ago.

In my view, this document should be regarded as a source of interesting information and nothing more. Conclusions should not be drawn based on the FOMC minutes. What is much more important is tomorrow's inflation report, and then it will be useful to track an instrument like CME FedWatch, which reflects the probability of monetary policy tightening at the next meeting. At the moment, it is no more than 20%. However, after the release of U.S. inflation data, it may significantly increase. In this case, in the next three weeks, there may be increased demand for the U.S. dollar, shortening the potential wave 2 or b. Otherwise, wave 2 or b may turn out as expected.

Based on the analysis conducted, I conclude that the construction of a bearish wave set continues. The targets around the 1.0463 level have been ideally worked out, and the failed attempt to break through this level indicates the market's readiness to build a corrective wave. In my recent reviews, I warned that it is worth considering closing short positions since the probability of an upward wave is high at the moment. A failed attempt to break through the 1.0637 level, which corresponds to 100.0% according to Fibonacci, would indicate the market's readiness to resume the decline. In this case, I recommend new sales of the instrument with a target at 1.0463.

The wave pattern for the pound/dollar pair suggests a decline within a new downtrend. The maximum that the British pound can expect in the near future is the construction of wave 2 or b. However, as we can see, even with a corrective wave, there are significant problems at the moment. I would not recommend new sales at this time, but I also do not recommend purchases because the corrective wave may turn out to be quite weak.

*Анализът на пазара публикуван тук има за цел да повиши информираността Ви, но не и да дава указания за търговия.

Chin Zhao,
Analytical expert of InstaSpot
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