Markets await the FOMC decision

Frank Walbaum

Important news this week

Wed, 16th, 20:00 CET US FOMC Interest Rate Decision.

Thu, 17th, 13:00 CET UK BoE Interest Rate Decision.

Fri, 18th, JP BoJ Interest Rate Decision.

Markets await the FOMC decision

The US Dollar is weakening ahead of today's FOMC decision, which could become a game changer for financial markets. A rate hike combined with a hawkish tone could send the USD sharply higher, while a more moderate message could weaken the Dollar and give stocks further room to recover.
Markets have retraced some of the losses seen earlier this week, with equities recovering from their recent decline. Crypto remains lower, while Gold and Silver are rebounding from technical support. Oil continues to rise, with WTI trading above $104.

Market talk

Today's FOMC meeting could determine whether the current market correction develops into a larger move or starts to reverse. Expectations and positioning are already likely to be reflected in prices, meaning the Fed's communication could create the biggest reaction. Investors will be watching not only the rate decision but also the statement, projections and Powell's press conference for clues about the path ahead.

The key issue is the balance between inflation and economic growth. If policymakers emphasize persistent inflation and the need to keep monetary policy restrictive, markets could quickly adjust their expectations. A more balanced assessment of inflation and growth could have the opposite effect, particularly if investors interpret the message as less restrictive than currently feared. For now, markets are waiting for the news.

Tendencies in the markets

Equities sideways, USD sideways, crypto sideways, oil strong, metals positive, JPY weak.

Author

Frank Walbaum

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold clings to recovery gains above $4,300, awaits Fed

Gold struggles to capitalize on its modest intraday move higher and remains below the $4,350 level in European trading on Wednesday. The US Dollar pauses for a breather after touching a two-week high and offers some support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key Fed event risk.

Bitcoin, Ethereum, and Ripple retreat as Fed rate decision looms

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure and consolidate at the time of writing on Wednesday after falling more than 3%, 4% and 9%, respectively, as the Clarity Act failed to advance in the Senate on Tuesday.

Fed decision in focus

Starting with the most important, the Fed decision. Heading into the event, data showed a rather punchy US August jobs report, which, you will likely recall, triggered a hawkish Fed rate repricing in rates markets. However, the recent US August CPI print mattered more.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.