Traders should be very careful when it comes to today’s FOMC decision. It include the Federal Funds Rate, Economic Projection, FOMC Statement and the Federal Reserve Chair Janet Yellen Press Conference.

 

For the time being, the general consensus points to no change, at least when it comes to the Federal Fund Rate. However, the key point in this meeting is the Federal Reserve Balance sheet.

 

Few months back, the Fed removed the sentence that said “The Fed will be ready to start trimming its balance sheet this year” instead, the Fed replaced this sentence with “The Fed will be ready to start trimming its balance sheet relatively soon”.

 

This change gave the market an idea that the Fed might not do this anytime this year. Therefore, if the Fed decided to announce it once again today, this will have a notable impact on the markets.

 

If the Federal Reserve decided to start trimming its balance sheet by few billions of dollars, this won’t change the current trend, whether in USD Index and/or the US bullish trend. In fact, the current trend is likely to accelerate.

 

On the other hand, if the Fed decided to start unwinding its balance sheet with a huge bulk of assets (unlikely), this would be the only reason for the US Dollar to turn higher, while the US equities may suffer for some time.

 

Remember to read the Fed’s statement very carefully before taking your decision.