Fed Chair Jerome Powell will testify today at 19:05 MT time. This event is crucial for traders as the tone of the speech may set the risk tone for the markets for the next two weeks.
What to expect from Fed announcement?
The US dollar has dropped ahead of the Q1 GDP report at 15:30 MT and the Fed announcement at 21:00 MT on April 29. Will it continue falling?
Look at the overall sentiment
These days Jerome Powell, the Federal Reserve chairman, has been the focus of attention. Everyone waits for today’s evening conference. If his statements are optimistic, the US dollar could surge but if he expects slower recovery, that could push USD down and turn traders to other safe-haven currencies like JPY or commodities like gold.
Pay attention to their pace of asset purchases
Nobody anticipates any new measures. This meeting will be about the actions that have been already taken and their results. Among them are asset purchases, quantitative easing programs and low rates. According to Michael Gapen, chief US economist at Barclays in New York, the Fed is slowing down bond purchases as the market environment is improving. It’ important to pay attention to their pace of asset purchases, as we can get some clarity on how long the central bank expects to keep supporting the economy.
No change in rates
In March the FOMC claimed it would keep US interest rates close to zero until the economy shows some kind of rebound. Also, Mr Powell said rates would not go negative as it would be inappropriate for the US. That’s why rates should stay unchanged today.
According to the Fed chairman, the output was likely to decline substantially in the second quarter before bouncing back in the second half of the year. However, the Fed will not release official guidelines until June. We can just look for some hints.
Non-farm payrolls, the most awaited economic report, will be out on March 5 at 15:30 MT time.
Australian GDP rose by 3.1%, exceeding analysts’ forecasts of 2.5%. The Australian dollar climbed after the release, but then joined its peers in falling against the USD.
Saudi Aramco site was hit by missiles on Sunday - no damage to oil supply was taken, but investor fear drove the price into the upside. Time to trade the cooling off then!
Great news for oil bulls! OPEC and its allied producers agreed to expand output cuts for the next month.
The USD skyrocketed after Fed Powell’s speech. OPEC and allied producers agreed to extend production cuts for another month. Oil surged.