Previewing the Fed Minutes

In June, the Federal Open Market Committee (FOMC) decided to extend Operation Twist until the end of the year, effectively taking a wait-and-see policy stance. The Fed did not want to launch a third round of quantitative easing at the time even though some analysts and Fed members had been advocating such action.

Traders will be watching to see exactly how close Fed members were to voting for another round of QE. If a large group of FOMC voting members advocated for further action, deteriorating economic data might be the key to unlocking further easing policies.

Traders should watch a few markets in specific around the release.

The U.S. treasury bond market tends to be volatile around these releases as the chart below shows. Traders could look to long bonds or short bonds via the TLT ETF TLT or TBT ETF TBT.

Gold prices also tend to be volatile around talk of Fed easing so traders could look to profit from swings with the SPDR Gold Trust GLD.

The dollar could rally if the Fed's tone turns more negative on the economy, as risk-off sentiment would most likely prevail. Traders could use the Powershares Dollar Index ETF UUP to implement trades with the dollar.