empty
 
 

Forex Analysis & Reviews: Activity in the foreign exchange market decreases before the Fed meeting on monetary policy (We consider it possible to buy the EUR/USD pair with a decrease in the range and expect the AUD/USD pair to continue to fall)
time 17.09.2019 12:53 PM
time Relevance up to, 01.01.1970 03:00 AM

Attack by opponent drones of Riyadh to oil refineries had a limited impact on the foreign exchange market. The local surge in demand for defensive assets, including the Japanese yen, the Swiss franc, gold and government bonds of economically developed countries, was limited since the Saudis and Americans did not find objective grounds to blame Iran for this attack. Most especially, the fact that they pleaded guilty to this attack Hussites who have been fighting with Saudi Arabia in Yemen for more than one year. This recognition knocks out the basis for the US desire to launch a military operation against Tehran and negates the likelihood of military conflict in the Middle East in the current situation.

Now, the attention of investors is completely shifting to the final decision of the American regulator on monetary policy. Today, the two-day meeting of the Federal Reserve begins and tomorrow, its decision on interest rates will be announced. According to market expectations, the Fed will lower its key interest rate tomorrow by 0.25% to 2.00% from 2.25% with a 36.5% probability, which is significantly lower than expectations that were two weeks ago. Then the dynamics of futures for rates on federal funds showed almost one hundred percent confidence.

But then,investors' expectations of lowering interest rates have significantly increased immediately by 0.50% given the events of recent weeks filled with news about the escalation of the trade crisis between the United States and China, as well as the publication of mixed statistics on the American economy and the ECB's decision to start a large-scale program to stimulate the economy of the euro area, and Donald Trump's strongest emotional pressure on the regulator in his desire to significantly cuts the level of interest rates. Again, the dynamics of rates on the Federal Funds shows such a probability of 63.5%.

Assessing such significant shifts in market expectations, we believe that if the Fed really decides to cut rates immediately by 0.50%, this will have a very negative effect on the US dollar. At the same time, it will spur growth in demand for US stocks -at least in the short term.

Forecast of the day:

It seems that the EUR/USD pair will be trading in the range 1.0940-1.1110 before the final decision of the Fed. We consider it possible to buy it at a decrease, approximately from the level of 1.0940 with a local target of 1.1110.

The AUD/USD pair falls on the wave of the publication of the protocol of the last RBA meeting on monetary policy, which showed that the regulator is ready to further reduce interest rates to support economic growth in the country. We expect continued local price decline to 0.6800 and possibly, even to 0.6785.

This image is no longer relevant

This image is no longer relevant

Pati Gani,
Analytical expert of InstaForex
© 2007-2022
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST
  • Ferrari from InstaForex
    Top up your account with at least $1,000
    join the contest and win Ferrari
    F8 Tributo
    JOIN CONTEST
  • Chancy Deposit
    Deposit your account with $3,000 and win $1,000
    JOIN CONTEST
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
    GET BONUS
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
    GET BONUS
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
    GET BONUS

Recommended Stories

USD may strengthen again

The robust US economy and aggressive rate hikes are strong trumps for the US dollar but they are not the only ones. The USD index rose due to strong demand

Marek Petkovich 13:43 2022-12-09 UTC+2

Markets will resume rally if there are positive news next week

The sell-off in equity markets ran out of steam on Thursday, signalling that the market has already played back the negative sentiment created by the strong labor market data

Pati Gani 13:42 2022-12-09 UTC+2

ECB will continue to raise rates in 2023

Euro is gaining, albeit gradually, after the deep correction earlier this week. This is because forecasts from several leading economic agencies say the ECB will raise rates rates twice more

Jakub Novak 12:10 2022-12-09 UTC+2

Dollar weakness: what to look out for

The two-day gains in precious metals and currency pairs with the dollar occurred amid the weakening dollar. Weekly jobless claims in the US rose to 230,000. This figure will certainly

Irina Yanina 11:45 2022-12-09 UTC+2

Has Bitcoin bottomed out, or will it fall to $5,000 in 2023?

The Fed may not be doing very well on inflation, but asset market bubbles are successfully bursting thanks to monetary policy tightening. This applies to the more than 50% collapse

Marek Petkovich 10:00 2022-12-09 UTC+2

EUR/USD. Speech of ECB head, Fed's "Blackout period" and Danske Bank forecasts

Next week the US Federal Reserve and the European Central Bank will hold their last meetings of the year. These events will be the final chord of the year

Irina Manzenko 07:35 2022-12-09 UTC+2

The market offers no support for the dollar.

What topics ought a trader in currencies to discuss this week? Business activity indices for the services sectors in the UK, the USA, and the European Union were released

Chin Zhao 06:09 2022-12-09 UTC+2

GBP/USD. Overview for December 9. The pound is increasing but is unable to comprehend why.

Also, on Thursday, the GBP/USD currency pair failed to break through the moving average line. If you examine the price movement since November 4 (or for a full month)

Paolo Greco 05:56 2022-12-09 UTC+2

EUR/USD. Overview for December 9. There are still no global factors for the growth of the euro currency.

The EUR/USD currency pair on Thursday maintained its previous movement pattern. Once more, the price could not surpass the moving average line, which is now giving rise to grave concerns

Paolo Greco 05:56 2022-12-09 UTC+2

EUR/USD. Unforeseen event circling over traders

EUR/USD bulls have exhausted their potential, which was based on rumors of a slowdown in the pace of monetary policy tightening by the Fed. Traders fear a "black swan"

Irina Manzenko 22:49 2022-12-08 UTC+2
Can't speak right now?
Ask your question in the chat.