The question on every trader’s lips is whether the FOMC minutes released at 7pm (BST) will state if the members of the committee discussed scaling back the bond-buying program. Currently the Federal Reserve is purchasing $85 billion of bonds, along with holding interest rates low.
Traders have attempted to second-guess Fed Chairman Ben Bernanke’s tapering. Following the announcement in June by Bernanke that the Fed could begin reducing the monthly purchases later this year hit precious metals prices hard; especially gold. YTD the yellow metal is down roughly a third as traders believe the price has been boosted by investors hedging inflation and from the ultra-loose monetary policy.
The key themes that will drive the markets will be; any hints towards timeframes and the strategy the fed will adopt to withdraw the current stimulus.
Just prior and following the release of the minutes, the markets will likely be extremely volatile as traders position themselves. This will affect the dollar, emerging market currencies and precious metals.
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