Important FOMC/FED Meeting Dates

fomc 2017As an investor, being aware of the dates of the upcoming Federal Open Market Committee (FOMC) meetings is key to being able to make informed trading decisions. As a key financial event, the  meetings are among the most high-impact dates on the economic calendar, and can have a significant effect on asset prices and liquidity in the markets. Being aware of the FOMC calendar will let traders know when these meetings will occur, so enabling them to either minimise their risk or maximise their profits based on their predictions of the outcome. As the FOMC announces the decisions taken by the US Federal Reserve about interest rates, these meetings are especially important for Forex traders because of the impact on USD currency pairings.

What is the FOMC?

The FOMC, or Federal Open Market Committee, is the Federal Reserve System’s body for monetary policymaking. In December 1913, the Federal Reserve System (“the Fed”) was created by President Woodrow Wilson and the US Congress as the Central Bank of the United States. The purpose of the Fed is to attempt to achieve stable prices, moderate long-term interest rates and maximum employment. In general, policy is conducted by the FOMC by altering short-term interest rate levels to take into account economic outlook changes. Since 2009, large-scale purchases of securities have also been used by the FOMC in an attempt to improve economic conditions and support financial recovery by lowering long-term interest rates. The three monetary policy tools are controlled by the Federal Reserve: reserve requirements, the discount rate, and open market operations. These allow the Fed to influence the supply of and demand for balances held at Federal Reserve Banks by depositary institutions, and thus alter the interest rate. In turn, the FOMC rate decision has a significant effect on other economic variables, including rates of foreign exchange, short-term interest rates, the price of services and goods, and even employment.

Who are the Members of the FOMC?

There are 12 voting members on the Federal Open Market Committee. These are made up of the seven Board of Governors members as well as five of the 12 presidents of the Federal Reserve Bank. While the New York Federal Reserve Bank’s president serves continuously, the other Reserve Bank presidents all serve a 1-year term on a rotational basis, commencing on 1st January every year. The rotational seats are filled by a president from each of the following four bank groups:

  • Richmond, Boston and Philadelphia
  • Chicago and Cleveland
  • Dallas, Atlanta and St Louis
  • Kansas City, San Francisco and Minneapolis

The FOMC meetings are also attended by all of the presidents of the Reserve Bank, even if they are not currently voting members. They participate in discussions contributing to economic assessment and helping to take policy decisions.

Current members of the FOMC for 2018 Alternate Members
  • Janet L Yellen: Chair, Board of Governors
  • William C Dudley: Vice Chairman, New York
  • Lael Brainard: Board of Governors
  • James Bullard: St. Louis
  • Stanley Fischer: Board of Governors
  • Esther L George: Kansas City
  • Loretta J Mester: Cleveland
  • Jerome H Powell: Board of Governors
  • Eric Rosengren: Boston
  • Daniel K Tarullo: Board of Governors
  • Charles L Evans: Chicago
  • Patrick Harker: Philadelphia
  • Robert S Kaplan: Dallas
  • Neel Kashkari: Minneapolis
  • Michael Strine: New York, First Vice-President

How Many FOMC Meetings are There per Year?

There are eight meetings every year on the FOMC schedule, one occurring around every 6 weeks. However, there may also be unscheduled meetings that are held whenever necessary in order to review recent financial and economic developments. Usually, the meetings only last for 1 day; however, in June and July, and January and February, the meetings last for 2 days during which longer projections of the GDP, unemployment rates and inflation rates for the year are presented. A policy statement is issued by the FOMC after each scheduled Federal Reserve meeting to sum up the current committee’s economic outlook, and any policy decisions that have been taken at the meeting. On four occasions during the year, the chair of the committee will hold a press briefing following the FOMC meeting, during which he presents the FOMC’s economic projections at the current time, and explains the context in which the policy decisions have been made. Complete FOMC meeting minutes are published 3 weeks after each scheduled meeting has been concluded, and it is possible to read a complete transcript of every FOMC meeting from when it is published until 5 years after the meeting.

When is the Next FOMC Meeting?

If you are asking when the next Fed meeting is, you will find here the FOMC meeting schedule for the upcoming FOMC meetings:

FOMC Meeting Dates for 2018

Month Date
January/February 31–1
March 14–15*
May 2–3
June 13–14*
July 25–26
September 19–20*
October/November 31–1
December 12–13*

*Meeting associated with a Summary of Economic Projections and a press conference by the Chair.

Why are FOMC Meetings Important to Traders?

Many traders use fundamental analysis when trading the financial markets, and economic indicators play a key role in this. The FOMC decisions on interest rates are a major indicator for the US currency, and are therefore vital for Forex traders to take into account when placing their trades. Being aware of the scheduled dates for FOMC meetings and knowing whether there is a Fed meeting on the day allows investors to be prepared for the inevitable volatility that will occur in the markets, and to incorporate this knowledge into their trading strategy at that time, whether they prefer to steer clear of the markets until the outcome of the data release is known, or whether they prefer to take the risk of using the predicted outcome to place their trade.

Strategies for Trading the FOMC

While most successful investors look for key economic dates such as that of the Fed meeting on the economic calendar in order to inform their trading strategy, the way in which individual traders use this information can vary considerably. Some investors pay close attention to the Fed calendar for upcoming Fed meeting dates because they prefer to avoid trading at all at these times due to the unpredictable fluctuations in asset prices, and the associated risk that comes with this market volatility. With rapid movements in the market, it is very easy to make a loss on a position, and for this reason it makes sense to some traders to stay out of the market and avoid placing a trade until prices have resumed their expected course. On the other hand, there are many other investors who thrive on the excitement of trading the volatility in the market during these key announcements, and prefer to take their chances in opening a position at this time based on the predicted outcomes of the release, in an attempt to maximise their profits and enjoy a successful trade.

Although there are several strategies for trading the FOMC, one of the best ways to approach it is to open a 5-minute S&P 500 chart and plot the 200 and 21 EMAs (exponential moving averages) on the chart. When the Fed meeting’s scheduled time arrives, a large initial move is generally observed in one direction. This is usually called Wave A, and represents the true direction in which the market wishes to go. It is important, however, to execute no trade at this point.

Following this initial large Wave A move, a retracement of the move will be observed, which will be called Wave B. This will take the market at least to the 21 EMA, and is a “fake” move.

You should only enter the market once the S&P has reached the 21 Exponential Moving Average, with an open target and a 3-point stop. Alternatively, it is possible to scale into the trade at the 21 EMA with half size, adding the other half to the position at 200 EMA.

Wave C will then follow. This will be in the same direction as Wave A, the initial move. You should then close half the position once 3 points have been made on the trade, and this will bring the stop to break even. You should then use a trailing stop for the other half on the 21 EMA, and this should allow you to make a good profit on your trade.

It is important to remember to use a very short-term chart such as a 1, 3 or 5-minute chart due to the volatility of market prices at this time. Should the pattern of the asset prices not play out as expected, it makes sense to avoid trading at all during this time, and instead hold off placing a trade until the volatility has subsided and the markets have returned to normal.

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