As you can see from the cart above (upper right) we have an up market leading into FOMC, there are new members at the FOMC table this go around. We should expect some push back in Bernanke’s low rates policy, which has been in place for over 2 years now. Could this push back be big enough for him to marginally raise rates? I doubt it but what is clear is they want the S&P futures at 1300 at all costs. notice we have euro weakness and marginal dollar strength over the 78 level which is the line in the sand. Gold is down but up considerably from this mornings session.
Volume is marginal as well, though i am not reading to far into todays volume ahead of the FOMC because it is usually all bidding and taking offers. standard pre FOMC trading.
A few scenarios can play out..
1. The keep rates the same and we rally up to 1300 and hesitate then move higher based on inflation and gold pushing us and a dollar break down.
2. They raise rates and the market rallies thinking the recovery is working enough to the point where the Fed is comfortable with raising rates. This is a fat chance but could happen
3. They raise rates, the dollar surges and gold drops taking the futures with it.