The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).
The Fed’s meeting will drive the USD
What will happen?
The Federal Reserve will release its statement and announce its interest rate decision at 21:00 MT time. Then, at 21:30 MT time, the central bank will hold a press conference.
Each meeting of the regulator draws the attention of the trading community. The central bank has to comment on the recent data releases, give its estimate of the US economy and outline its plans for stimulus and interest rates. The better the US economic figures, the higher the pressure on the Fed to start normalizing policy. In the past weeks, America has released some decent numbers, so traders will sit nervously in front of their monitors waiting for Jerome Powell and his colleagues to give the market some signal.
How to trade on the Fed interest rate decision and press conference?
The logic is simple. If the Federal Reserve admits that the American economy is doing fine, the USD will strengthen. If it hints that the time to raise interest rates may come earlier than expected, the USD will strengthen. If the Fed becomes concerned with rising inflation, the USD will strengthen. If the actions of the US central bank are the opposite, the USD will weaken.
Let’s summarize these considerations:
- If the Fed is optimistic, the US dollar will go up.
- If the Fed is uncertain or cautious, the US dollar will go down.
Instruments to trade: EUR/USD, USD/JPY, GBP/USD, XAU/USD.
The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
Last week was full of surprises! Stock indices have shown significant growth…
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).