Following large swings yesterday, and awaiting FED rate decision today, expectation was for a relatively quiet day in currencies. Exception would have been farther deterioration of situation in Europe. And that’s what happened. Standard & Poor’s cut the debt rating of Spain, lowering it from  AA+ to AA with a negative outlook. At the same time Greek paper was under pressure again, pushing yield on 2 year notes to 18%! That made for relatively lively European session, but nothing extraordinary. Collectively, markets probably expect these kind news now, so element of surprise is largely gone. Nonetheless, dark clouds are getting darker.

FOMC meeting was supposed to be highlight of the day, but turned out to be a non-event. No changes, and currencies barely moved in the aftermath. It must have been most boring FED decision in, what, years? Hourly range for EUR-USD was about 40 pips during this time, less than swings during European hours. Lack of interest from the markets didn’t stop CNBC from assembling an “all-star cast of analysts” (as they put it), in order to discuss repercussions of today’s decision. They focused on language of release, looking for clues about what FED is “trying to say”. Seriously, has anybody ever made money, apart from the talking heads, looking for hidden meanings in these statements? Perhaps next time they can bring a cryptographer, astrologist and a fortune teller (an all-star cast of charlatans), to help them out?

After very active start of the week I basically decided to sit today out. Don’t like getting into new trades before these announcements. If position is already open, that’s a different story, but normally I’m less active. If statement elicits strong reaction from the markets, I might get in once the dust settles down, but today even that was lame. With neither Dollar nor Yen pairs  moving, I took one trade and it was more for demonstration here than a serious attempt to make money.

Typically, I’m looking at the direction of hourly candle during which decision rate was announced. By the time it closes, any fake outs and false moves are pretty much over and, if the move is for real, price should continue in that direction for few more hours, albeit at slower pace. Well, today reaction was so small, that trend set by this candle is, at best, suspect. I went long at the open of next hourly period, but had enough after two hours, with 11 pips. No other trades of this sort, due to miserable price behavior.

Early yesterday, I decided to get out of a long trade in GBP-AUD from few weeks ago. Entry was at 1.6556 and for practical purposes price has been drifting sideways within a wide band. During this time couple of upside breakouts happened, but without any gain. By now consolidation has become so prolonged, that I lost patience and decided to salvage few pips while I still could. It started to look like price was ready to collapse again, so trade was terminated at 1.6614, for a small gain of 58 pips. For right now, plan is still to buy upside breakouts using daily time frame. That would be around 1.6750 or so.

Judging by tepid response to rate decision, market players are not ready to commit themselves, and charts show it. Prices are in middle of congestion zones, have no direction, as if waiting for another catalyst to nudge them either way. So am I. Uncharacteristically, I’ll likely be trading small time frames 5M, 15M, looking for smaller target trades 20-30 pips or so. Something similar to the chart above, the EUR-JPY and other pairs with tight spreads. Feel rested, so will try to get active on Thursday and see how this works. Have not done it in some time so it will be a change. But not a permanent one.

Mike K.