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As it happened last month with the BOE, market decided to sell off the GBP when BOE announced the rate hike………….the classic rally on rumours and sell on fact.

Of course, in the GBP’s case, the GBP rallied aggressively prior to the rate decision by BOE.

In the case of the US Dollar, it has lost ground to the EUR.  GBP’s weakness is because of the failure of the recent round of Brexit talks between the EU and Theresa May.

The JPY is the reverse with US gaining ground coming up to the FOMC decision. AUD has weakened recently because of the fear of a softening economy.

So how will the US Dollar react on FOMC rate decision day?

Right now, it appears that it can go either way, so it looks like I will be putting on a straddle to capture either direction if and when it happens.

Are we expecting volatility? Yes!

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