45 minutes to blast off

We are 45 short minutes away from Alan Greenspan’s final hurrah as Chairman of the FOMC.  Coincidentally, many are speculation on interest rates and the new captain taking the helm.  Because of the volatility expected from the meeting there are a couple of strategies to consider.  The Eur/Usd is extremely interest rate sensitive.  The Euro has climbed 60 pips in anticipation of the announcement.  One may consider placing interest orders both sides of the current rate of 1.2176, 50 or more pips out, in this way, it doesn’t matter which direction the rates go as long as it is a significant move, the trade could be profitable.  Another technique would be to buy exotic or fixed rate options placing one-touch positions out over 100 pips assuming a run one direction or the other.  This will work if and only if the payout on one direction is higher than the cost on both of the one-touch options.  The Aud/Usd will also be affected as many investors move to gold as a hedge against interest rates, if interest rates go up, the investors will run back to the interest rate or USD if interest rates stay the same or go down than the investors will stick with gold.  Once again the straddled entry technique or exotic options could also be used on the Aud/Usd, keep in mind the Aussie does not move as much as the Euro so you will want to tighten up the options and/or entry positions.