Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements. Be ready to take action!
News from US central bank
What will happen?
The Federal Reserve (FOMC), US central bank, will publish its December meeting minutes on Wednesday, January 5, at 21:00 GMT+2 (MetaTrader time).
Why is it important?
On Wednesday, December 16, the Federal Reserve announced that it would speed up the taper of its asset-purchase program. In addition, the Fed indicated it sees three rate hikes in 2022 versus the two increases previously expected. These projections reflect the Fed's shift from supporting the economy to fighting inflation. All things equal, this is positive for the US dollar in the medium term. Yet, traders will surely want to know more details about the central bank's plans and the mood of the Federal Open Market Committee (FOMC) members. The FOMC minutes will provide such information.
The minutes are a detailed record of the FOMC's most recent meeting, containing in-depth insights into the economic and financial conditions that influenced the FOMC vote on where to set interest rates. That's why the release will have an impact on the US dollar.
What happened last time?
FOMC Meeting Minutes released on November 24 showed that more Fed officials were open to speeding up bond-buying taper and rates liftoff. That made the USD rise versus other currencies. Market players were ready for such an outcome. So traders started actively buying the USD on November 22. As a result, USD/JPY rose from 114.00 to 115.40 during three days.
How to trade on FOMC Minutes?
Open the economic calendar a few days before the FOMC Meeting Minutes release. Then check what analysts and traders expect from the Fed. You can also check the FBS analytics Telegram channel.
- The USD will strengthen if the FOMC is even more hawkish than thought.
- If the FOMC is cautious about the US economy, the USD will weaken.
Instruments to trade: all the major pairs and XAU/USD
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