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Buy the Rumor - Sell the Fact on FOMC

Thursday, March 16, 2017 5:12 AM GMT

As expected by the market, Federal Reserve raised the benchmark rate by 25bp, to a range of 0.75% to 1%. Yellen repeated that the US economy continues to expand at a moderate pace. They are closer to their goals regarding employment and inflation, therefore the economy stays in line with FOMC’s forecasts. 

How rate hike effected markets? US Dollar fell sharply near to 100.50$ (from 102) while US indices (SPX500, US30) reacted upwards. Gold surged from 1205$ to 1220$ and US 10 Year Treasury Note upraised from 2.50% to 2.53%.  Overall, the market played “buy the rumor – sell the fact” as more USD buyers were coming near to event - buying the rumor – and then took their profits in the event – selling the fact. 

Let’s see this on the below chart:       




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