2019-11-11 • Updated
The US Federal Reserve will release the minutes of its August meeting today at 21:00 MT time. You can find this event in the economic calendar:
The event is market with highest importance, and it will have an impact on the USD.
Most traders expect the Fed to raise rates 2 more times this year – in September and in December. According to the futures on the federal funds rate, the market is pricing in a 93.6% probability of a rate hike next month and 59% chance of a rate increase at the end of 2018.
The minutes will tell us more about the Fed
The document released today may offer traders an insight into the central bank’s plans for 2019. The question is how many hikes are planned next year. The minutes of the June meeting showed that the FOMC members did express their views about this. However, no details were revealed to the markets. As a result, traders and investors do not have clear expectations about the Fed’s policy in 2019. There’s talk about the possibility of 2 rate hikes next year, but everything looks uncertain. This means that this isn’t priced in the USD exchange rate yet. If the Federal Reserve provides some information about the future path of rate increases, it will have a great impact on the USD exchange rate.
The US President Donald Trump is also trying to intervene. He has recently repeated that he didn’t approve rate hikes. Such words hurt the USD. At the same time, it’s necessary to remember that the Fed is independent. It’s not likely that the central bank will be influenced by Trump. The reasons behind the actions of the Fed are economic. According to Morgan Stanley, “Trump’s comments may even harden instead of soften the Fed’s current hawkish policy stance.”
Analysts at Nomura and Goldman Sachs think that the minutes may mention trade policy and the uncertainties that are related to it. This hasn’t been the part of the central bank’s statement which was released right after the meeting. If there expectations come true, the USD will suffer.
Friday is also important
Another hint from the Federal Reserve will come on Friday as its Chair Jerome Powell speaks at Jackson Hole symposium. In July, Powell said that “for now” the Fed plans to “keep gradually raising the federal funds rate.” Analysts at Standard Chartered Bank think that if Powell repeats the words “for now”, then traders would think that he’s giving a rebuff to Trump. In this case, the expectations of a rate hike in December will go up and so will the USD.
So far, the American currency managed to find some support ahead of the event. You can see the important levels marked on the chart.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Bearish scenario: Sales below 80.00 with TP1: 79.60... Anticipated bullish scenario: Intraday purchases above 80.70 with TP: 81.50...
Bearish Scenario: Sales below 78.99 with TP1: 77.93, TP2: 77.45, and upon its breakout TP3: 76.56 and TP4: 75.70 Bullish Scenario: Purchases above 78.00 (wait for a pullback to this area) with TP1: 1679.00 (uncovered POC*), TP2: 79.33, and TP3: 79.66 intraday
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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