Welcome to today's Morning Coffee Break - This morning is the day market participants have been waiting for since Fed Chairman Ben Bernanke’s Jackson Hole speech a couple of weeks ago.  U.S. Equity markets are likely to remain in a fairly tight range ahead of the Federal Reserve’s key interest rate decision and policy statement scheduled for today at 12:30 a.m. ET. Followed the all-important FMOC economic forecast which could reveal the possibility start of the third round of quantitative easing or more commonly known as QE3.

Market participants will be watching closing to see if the Dow Jones Index can continue its move higher as hit yet another 4 plus year high by moving higher 5 out 6 sessions. The S&P 500 and the NASDAQ have moved higher 4 out of 5 sessions.

Economic Data Affecting Markets:

The U.S. economic calendar has several key government reports due out today.  At 8:30 market participants will receive jobless claims as well as the producer prices index reports. Analysts are looking for increase of initial jobless claims to 370K for the week ending September 8^th.  Expectations are for the producer price index to come in at 1% increase for the month of August. For a complete list of global and emerging market economic data please check out our economic calendar here.

Global Markets:

During the Asian session most equity indexes came under pressure as market participants became cautious ahead of the Federal Reserve statement in which traders and investors are hoping for additional stimulus measures (QE3) from the central bank.

An interesting ripple effect from the U.S. to the Asian markets was Apple’s (AAPL, [stock AAPL])release of the iPhone 5 caused higher volume in iPhone supported network operators.

Futures and Commodities Corner:

In today's Morning Coffee Break we find the commodity in focus today is clearly on gold ahead of the FMOC statement release as gold futures move lower in yesterday session and basically remain flat through the overnight session into the U.S. electronic trading session. The FMOC is clearly the lynchpin in gold future prices – QE3 equals gold higher – no QE3 equals gold lower. It’s that simple folks.  Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, [stock GLD) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.

Because the U.S. dollar traded inverse to gold the opposite results on the outcome of the QE3 decision will be on the U.S. dollar. Equity only readers gain exposure through the Power Shares DB US Dollar Index Bullish Trust (UUP, [stock UUP]) ETF that seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Long US Dollar Futures index. The UUP is comprised solely of long futures contracts. The UUP attempts to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

The Morning Coffee Break Bottom Line: 

Market likely to thread water up to the each of the key FMOC trigger points.  The first event occurs at 12:30 a.m. ET for the release of key interest rate decision and again at 2:00 p.m. ET when the FMOC statement is released. Look for markets to be volatile prior to each event as traders jockey and speculate on the outcome of each event.  Watch gold and U.S. dollar prices as well.