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Hey All,
2 day Federal Reserve policy meeting begins today.
Markets is expecting the US central bank to unveil its plans to shrink its 4.5 trillion balance sheet.
Any trader with a crystal ball would definitely make a killing in the forex market during this event.
But I don’t have it and so I will base my prediction on the following:
1) Participants are questioning the ability of the Fed lifting interest rates when inflation is diverging from the 2% target according to recent reports and only relying on the labour market strength.
2) Jobless claims is likely to rise from 284K to 300K this week.
3) US benefits from a stronger EURO, which is good for their export to the Eurozone, and so it will be very careful not to make any statements that would weaken EURO against the USD.
and
4) Disastrous economic effects of hurricane Harvey & Irma on the US States of Texas and Florida.
FOMC hiked federal funds rate for the fourth time in this cycle in June. The rate was on the record low of 0.25% for almost a decade, until December 2015. The interest rate corridor now stands at 1.00% - 1.25%.
Most market participants expect the committee to commence balance sheet reduction at this meeting and deliver another rate hike in December.
The reaction will depend solely on the FOMC statement and whether the current stream of weak data has in any way altered the committee's guidance on rates. I think they'll remain on course and that should send the dollar higher, in the short term.
That's all for now !!
Cheers !!
2 day Federal Reserve policy meeting begins today.
Markets is expecting the US central bank to unveil its plans to shrink its 4.5 trillion balance sheet.
Any trader with a crystal ball would definitely make a killing in the forex market during this event.
But I don’t have it and so I will base my prediction on the following:
1) Participants are questioning the ability of the Fed lifting interest rates when inflation is diverging from the 2% target according to recent reports and only relying on the labour market strength.
2) Jobless claims is likely to rise from 284K to 300K this week.
3) US benefits from a stronger EURO, which is good for their export to the Eurozone, and so it will be very careful not to make any statements that would weaken EURO against the USD.
and
4) Disastrous economic effects of hurricane Harvey & Irma on the US States of Texas and Florida.
FOMC hiked federal funds rate for the fourth time in this cycle in June. The rate was on the record low of 0.25% for almost a decade, until December 2015. The interest rate corridor now stands at 1.00% - 1.25%.
Most market participants expect the committee to commence balance sheet reduction at this meeting and deliver another rate hike in December.
The reaction will depend solely on the FOMC statement and whether the current stream of weak data has in any way altered the committee's guidance on rates. I think they'll remain on course and that should send the dollar higher, in the short term.
That's all for now !!
Cheers !!
