FOMC Meeting Minutes due at 2:00 PM.

At this meeting the Fed defined extended period of time to read “mid 2013″. 

The minutes will be found on the Fed Reserve of the US website soon after 2 PM ET:

http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Below is the FOMC Statement released from the meeting.

Release Date: August 9, 2011

For immediate release

Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected.  Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up.  Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed.  However, business investment in equipment and software continues to expand.  Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity.  Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions.  More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks.  Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.  Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further.  However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.  The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.  The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability.  It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.

ECB Trichet says Euro is a very solid currency.

• Governments are tackling a difficult situation

Technically Speaking with James Chen REBROADCAST

Rebroadcast of Technically Speaking.

Greg Michalowski filled in for James Chen and spoke on the current non-trending market environment. 

CLICK HERE TO VIEW THE REBROADCAST

Feds Kocherlakota says sees no reason to revisit Feds conmmitment to 2 yr rate decision

• He plans to abide by the commitment when thinking about his own policy decision
• Fed commitment to inflation goals has kept US inflation in check
• Any addiitonal easing would need to stand on its own merits
• 2.5% GDP over next 2 year vs 3 to 3.5% in November
• Letting inflation veer from 2% for >2 year threatened the expectations
• If deflation appears more accomodation might well be needed
• 1.8% PCE is consistent with price stability
• Rise in inflation, fall in unemployment mean monetary policy whould be tighter not looser (*not sure I see the fall in UnE he refers to)

EURUSD tests 100 hour MA (and other resistance at 1.4450)

The EURUSD moved higher and tested the peak of the resistance area at the 1.4450 level (SEE EARLIER POST). At the level, the 100 hour MA , highs and the underside of prior trendline all intersected.   The price has moved lower off the level as the choppy action continues for the pair and shorter term traders remain in the drivers seat.

On the downside, the 100 bar MA on the shorter 5 minute chart (see chart below) at the 1.4429 level currently is the dividing line on the downside intraday. Price moves below and the traders will likely liquidate.  Stay above and all is ok for another test of the key resistance at 1.4450.  A move above the 1.4450 level targets the 1.4472-75 area for the pair. The 1.4472 is the 200 bar MA on the 5 minute chart (green line in chart below). 

Despite the very weak consumer confidence, the stock market is not buying the plunge in the release. The Dow is near unchanged now and that seems to be a support to the EURUSD.

EURJPY tests trendline support and holds

The EURJPY has been moving lower from most of the day but has found support against the key support. The price has been pounding against the 100 trendline and 50% retracement of the 2 week move to the upside in NY trade. The support held support at the 110.45 area and in the correction back higher is now back above the 200 hour MA (green line in the chart above) at the 110.67 level.    The trading bears today are feeling a little pressure, but the correction move higher remains below intraday resistance against the 100 bar MA on the 5 minute chart (testing now). The 38.2% of the move down today will also be eyed at the 110.88 (see chart below). Stay below the 110.88,  and the downside may take on another test. 

EURUSD respecting topside resistance in up and down action after Consumer Confidence

The EURUSD moved down on the much weaker Consumer Confidence(weaker US leads to weaker stocks and weaker EURO is the recent story that the market reacts to). However, the price has moved back higher and tests the 100 bar MA on the 5 minute chart.  Activity is two way. The market is still unsure of direction. It is respecting resistance above but apprehensive to move any lower at the same time.  

There was chatter earlier that the ECB was in the market buying Italian bonds.  This may be keeping the EURUSD supported.  The technical levels will continue to dominate it seems.

AUDUSD tests 100 day MA at the 1.0645 level

The AUDUSD is testing the 100 day MA at the 1.0645.  Key level for the pair.  The price has been above it today. It has been below it today.  The price has been supported by the break of the bull flag three trading days ago (see chart above).

The pair will be fighting between USD weakness on weak Consumer Confidence data/QE3 possibility and “risk off”  should stocks start to falter and head sharply lower.  Tthat could tilt the AUDUSD to the downside. The 100 day MA is the dividing line from a technical perspective.  Price above bullish. Price below bearish.