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FOMC Meeting: Will We Get A Trick or Treat on Halloween from the Fed?
By DailyFX Updates | October 29, 2007
With the clock ticking until the all-important Federal Reserve interest rate decision at 14:15 EST on October 31st, traders are quickly upping the ante and betting that the central bank will be cutting rates on Halloween. Currently, Fed fund futures are pricing in a 98 percent chance of a 25 basis point cut to 4.50 percent and a 2 percent chance of no change, but forex and equity traders have been cautious amidst the completely divergent speculation that the FOMC could also show the markets some tough love by not cutting rates at all or cutting them by 50bp to put an end to any further easing. In fact, 30 percent of the economists polled by Bloomberg believe the bank will keep the benchmark lending rate at 4.75 percent. Many US Dollar pairs, including EUR/USD, are trading at extreme levels and a major event risk could trigger a sharp and sudden turn. Will this week’s FOMC rate decision do the trick?
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