Decisions are generally data-driven.
This means that policy decisions are tailored to economic activity, the achievement of policy mandates and financial conditions.
Since long-term views are prone to change too much, short-term forecasts tend to give investors the edge in this case.
The Federal Reserve is an independent agency with broad authority over financial conditions.
The Federal Reserve must make policies and decisions appropriate to meet its long-term economic goals, economic conditions, and indicators, and the independence of all the institutions is essential to value.
Changes in the dollar have a direct impact.
Generally speaking, when interest rates are raised or kept low, this is good for the currency.
Conversely, when interest rates should be cut or kept high, investors are attracted by higher returns.
When interest rates rise, foreign investors choose to shift their local currencies into dollars, sending the dollar’s value up again.
Can a trader predict the Fed‘s policy decision?
Yes, since the Fed’s policy is so transparent, and the FOMC’s most influential dot plot, traders are in a good position to predict the Fed’s decision.
This is also one of the keys to fundamental analysis.
These policy decisions affect financial markets as well as the economy.
As one of the world’s major currencies, the Fed’s policies can even affect those of many other countries.
