Today, the Federal Open Market Committee (FOMC) will be concluding its two-day meeting, this is followed by a press conference where the interest rate decision will be announced.
Speculation is strong that the Fed is expected to take the dramatic step of cutting interest rates today, even though the US economy is considered to be performing well. The move that should see the rate being cut by a quarter point is being hyped as a preventative measure.Some market experts have suggested that the cut should be 50 basis point cut, but the fed funds futures market puts the probability of a quarter point cut at more than 78% and a half percent cut at around 22%. The fed Chairman, Jerome Powell has made it clear the Fed would be willing to make a so-called cuts, to protect economic expansion.
Whilst the fed seems to be proactive in its actions, President Donald Trump has directed criticism in their direction, saying that the Fed should have easier policy and its interest rate policy has hurt the U.S. economy. Trump said on Tuesday the Fed should make a bigger interest rate cut. “I’d like to see a large cut, and I’d like to see quantitative tightening immediately stopped,”
Overall, the US dollar is being seen as too weak, and Trump has blamed the easy policies of other central banks, for weakening their currencies, based on that a dollar that is too strong could in fact become a worry for the Fed.
Interest rate decisions are likely to cause volatility in USD related pairs and US Stocks, which can produce new trends and excellent trading opportunities, and therefore we recommend that all traders be prepared.
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