Forex Basic Analysis
FED (Federal Reserve)
The Federal Reserve is the central bank of the United States, which was founded on December 23, 1913. Over time, the roles and responsibilities of the Federal Reserve System have been expanded and changes have taken hold. Ben Bernanke, head of the central bank in Washington. The bank also has the authority to print and distribute US dollars.
The Federal Open Market Committee (FOMC)
The FOMC is the US Federal Reserve Open Market Operations Committee. It is the most important part of the Federal Reserve System’s monetary policies. The FOMC has important tasks such as increasing employment, keeping inflation and macroeconomic balance at an acceptable level, and taking measures to promote economic growth.
The Federal Open Market Commitee meets eight times a year to assess economic trends and determine their monetary policy. FOMC Meetings (FOMC Minutes) are announced three weeks after the FED meetings. In the meeting records; The reasons behind the decisions of the FED meetings include the FOMC members’ view of the macroeconomic outlook, the duration of economic measures and interest rate decisions, and forecasts for future periods. Investors look for clues in this long text for changes that may occur in the FED’s monetary policies.
Interpretation of FOMC Decisions
Interest Rate Decisions: Commitments to keep FED’s policy rate at certain levels are affecting the course of the US dollar and commodities. For example; A clue to the prolongation of the rate at which interest rates are held at very low levels will create a low interest-weak dollar sense.
One of the biggest obstacles to monetary expansion is the risk of rising inflation. Because obstructing inflation is a priority, money supply is reduced and interest rates tend to rise. The FOMC’s views on the current inflation contain a hint in this regard. The fact that inflation is not seen as a danger / risk in the near waters can increase hopes for monetary expansion.
FED’s prospects for employment, housing and manufacturing are very important. If the Federal Reserve expresses recovery in the economy, expectations for monetary expansion may be delayed.
Whether the decisions taken at the meetings are unanimous or whether the decision is taken by majority vote is an important clue to future FED decisions. In particular, the increase in the general public opposition on the issue of asset purchases can create question marks.
New Monetary Policies:
The general expectation of markets for the Federal Reserve, asset purchases as soon as possible, and so on. Option to generate dollar buys. The increase in the probability of monetary expansion leads to a rise in foreign currency pairs, especially commodities, which include the dollar as the opposing unit, such as the euro / dollar parity, while the dollar is gaining strength in statements that do not contain a new word / sentence.
ECB (European Central Bank)
The European Central Bank (ECB) is one of the most important central banks in the world, responsible for managing the monetary policy of the 17 countries in the Eurozone. On June 1, 1998, it was established in Frankfurt, Germany. The bank’s main task is to protect avonun purchasing power and ensure price stability in the euro area. Since 1 November 2011, the Italian economist Mario Draghi has been chairing the presidency. AMB is a common monetary authority of the member states of the European Monetary Union and establishes the European system of national central banks and central banks of EU countries. It is an organization that establishes its own procedure within the European Union. It is an international supreme institution with personal rights. It was established in 1998 under the European economy and the monetary union. The center is in the Euro-tower in Frankfurt.
The work and tasks of the European Central Bank were regulated by various protocols in the Maastricht Treaty, signed in 1992. For smooth and productive work the ECB needs to work independently of the political influence. In the main agreement of the European Central Bank System and the European Central Bank, to which the minutes of the European Community Convention are added, there are several explanations of the institution’s duties and duties. The primary target is the stabilization of the price level in the Euro Zone; While another goal is to promote economic policy in the European Union for high employment and sustained growth. This is done as long as price stability is not in jeopardy.