The Fed can start tapering already this November, oil is rallying pushing the Canadian dollar up! Jump in to know more!
Preview into the FOMC meeting
Pay attention: the FOMC meeting is today at 21:00 MT time
Why is it so important?
No changes to the interest rate are expected. The Fed will publish the statement, which will contain the commentary about the economic conditions, discuss the economic outlook and offer clues on the future path of the monetary policy.
The recent comments by policymakers on a rate cut later this year increased worries in the market.
In addition, various inflation measures dropped below the 2% target and raised concerns over the rate cut even more.
What to watch?
- If the dovish scenario is confirmed, we may see the revision of the inflation forecasts to the downside.
- Also, we expect the shift in dot plot to the expectations of one rate cut by the end of the year.
As the dovish expectations are already priced in, any hawkish comments by the Fed Chair Jerome Powell will bring positive momentum to the USD. On the other hand, strong dovish tone of the statement will weaken the greenback.
On the H1, the pair has been awaiting the FOMC meeting. It has been trading between the resistance at 1.12 and 1.1188 since the beginning of the trading day. Hawkish surprise from the Fed may pull the pair below the 1.1188 level. The next levels in focus for bears lie at 1.1177, 1.1162 and 1.1147. If the USD weakens today, bulls will break the resistance at 1.12 and target the next levels at 1.1211, 1.1222 and 1.1242.
On the same timeframe, the USD rose against the JPY at the beginning of the day but was not able to stick near the 100-hour SMA. At the moment of writing, the pair has been moving towards the support at 108.35. The next support levels are placed at 108.28 and 108.24. On the other hand, bulls keep their eyes on the resistance level at 108.44. If it is broken, the pair will rise further where it will face the 108.49 and 108.53 levels as resistances.
Germany, the leading economy in the Euro Zone, will reveal one of the key economic indicators – German Ifo Business Climate on September 24 at 11:00 MT time.
That day has come, guys! The Fed will hold a meeting at 21:00 GMT+3. It can be a highly impactful event. The markets expect the bank to hint about the timing of tapering.
Commodities (iron ore, oil) and commodity-linked currencies (AUD, CAD) surged. West Texas Intermediate has reached $75 a barrel, while Brent rose to the highest mark since October 2018.
Although Jerome Powell’s speech sounded hawkish on Wednesday, September 22, markets did not get scared and the main stock indices got bought back…
Turkey’s central bank governor was at a crossroads: to hold interest rates and take a risk to be fired like it was for three governors before him, or to comply with the president, to cut rates, and to risk the market. Let’s find out, how to react to the rate cut.