Despite the fact that the markets are a bit quiet, we’ve seen steady growth overnight and there’s still a chance that the next Fed meeting could make an unexpected move. If that happens, you should be prepared. If the Fed does not raise interest rates, the USD will continue its decline. However, investors will turn their attention to equities. This will lead to value gains on major stocks, such as the S&P 500. In addition, the EUR will gain across FX pairs, such as the EUR/GBP. Commodities will also benefit, such as the yellow metals.
Markets Have Steadied Overnight
Traders have steadied overnight ahead of the next Fed meeting, which will take place on Wednesday. This is despite the fact that the markets have been digesting the recent Fed tightening. As a result, investors are in a wait and see mode. They are unsure what policy makers will say about slowing economic growth and inflation. While it may not be immediately apparent, a good month’s worth of data has provided a strong reminder that the US economy is near full capacity. It’s also possible that the markets will be volatile in the coming week. The next fed meeting statement and the subsequent release of the November jobs report will be watched closely. The two events will give investors clues about the Fed’s future course.
In addition to the upcoming jobs report, traders will also be looking forward to a speech by Federal Reserve Chair Jerome Powell. He will speak at Brookings Institution and discuss the Fed’s policy outlook in the near and long term. The Fed’s most recent decision was a 75-basis point increase in the federal funds rate. This is a fairly conservative number and most participants consider it to be neutral.
Rate Hikes Will Depend On Inflation Outlook
During the financial crisis, the Federal Reserve took action to bring interest rates down to near zero. Now, the Fed is focusing on bringing inflation back under control. The central bank is raising the key rate by three-quarters of a percentage point, and a majority of its participants expect the Fed to raise the benchmark rate again in November. The rise in interest rates has prompted businesses to slow down their spending and hiring, as well as their investment. In addition, the stock market has reacted to the tighter monetary policy with a selloff. Depending on your vantage point, the most recent Federal Reserve decision can have a big impact on the US dollar and the forex market. These changes may or may not be noticeable on the currency exchange rate and the market may not even know about them. However, with proper preparation and research, you can take advantage of them and reap the rewards.
The Fed has a dual mandate: to stimulate the economy and keep prices stable. Typically, the interest rate changes are a reaction to economic indicators that have been observed during the month. When the actual number is lower than anticipated, the Fed cuts the rate. In this case, the US dollar is likely to fall. The Federal Open Market Committee meets eight times a year. It is composed of seven members of the Board of Governors. The committee is tasked with determining monetary policy.
Importance Of Fed Meeting
Whenever there is an important Fed announcement, you will want to be prepared. Fortunately, AvaTrade’s customer support team is there to help you make the most of this event. They can provide insights on the Fed’s meeting as well as help you make a good trade. Central bank meetings are among the most anticipated events in the financial markets. They affect major currencies, indices, and stocks. The details of the meeting provide investors with an indication of how the Fed will decide on monetary policy. The meeting also explains the bank’s perspective on the future.
The next Fed meeting is likely to set the tone for the remainder of the week. As the stock market has been relatively quiet, it is expected that traders will await the monetary policy decision with great anticipation. The US central bank raised borrowing costs last month, and the minutes of its latest FOMC meeting discussed a variety of tools the Fed could use to support the economy. The minutes put a brake on the stock market rally, and provided a shot in the arm for the US dollar.