June 19-20. The U.S Federal Open Market Committee (FOMC) meeting is to be conducted. The results of the meeting will provide valuable data in terms of economic activity and monetary policies. It can therefore provide a very volatile trading environment.
Since the Non-Farm Employment Change report printed a net change of -82,000 on the 1st of June, calls for further monetary easing or Q3 has strengthened. The anticipation of further easing provided some support to the markets.
The ASX has gained 3.8% and the Australian Dollar gained 6.21% since the Non-Farm Employment Change, despite the uncertainty in Europe in the form of the Greek election and Spain’s banking crisis.
The rise in both indices and currencies indicates that the markets are slightly positioned towards more accommodating actions resulting from the FOMC meeting. Therefore, a neutral response or position from the FOMC would be somewhat unexpected and not anticipated. This scenario could result in volatile markets. Any positions in the market should therefore be carefully managed during this time.