In the Early hours of Thursday (AEST, Wednesday for everyone else) we will be hearing from the Federal Open Market Committee (FOMC). They will be delivering their economic projections and providing a conference with Federal Reserve Chairman Jerome Powell making a statement.  The last time we heard from the FOMC and chairman Powell, we got brief details about the changing of the Feds policy path, and their new strategy of an average inflation target. There has been a great deal of speculation on what might be coming next from the Fed at this week’s next meeting, with many analysts trying to determine if there’s going to be any action.

Investors will be trying to evaluate the action or non-action from the Fed and if it is going to be good or bad for the US dollar. So far since the last announcement from the Fed, the US dollar has been relatively soft, sliding against the AUD, JPY, NZD, and the GBP. Of course, the EUR did see the dollar strengthen against it but that has more relevance to the EUR, the European Central Bank and current Brexit talks so that’s a separate matter not within the scope of this text for today.

For me personally I’m not expecting the Fed to invoke any new changes to monetary policy. Though we will most certainly be seeing adjustments made to the language used to reflect the new policy strategy adopted by the Fed. I feel the focus will be on the FOMC projections report, we may see the projections on the new strategy for averaged inflation and maximum employment.

The bottom line on the projections is about their growth outlook, are we going to see lowered expectations or improved long standing outcomes. Either of these projections by the Fed is going to influence the dollar, but I feel many are used to the dovish nature of the Fed and have set their own expectations accordingly.

Thinking about what we may see at the Fed meeting means we should consider what the Fed might be looking at, those economic indicators that give us an overall gauge of health for the US. The positives are in The Housing and inflation figures which are showing signs of life, but there are still subdued figures in Consumer data figures along with manufacturing and employment. The true outlier is in financial markets with stocks and bond markets sitting comfortably.

When we look at the economic health indicators, it leaves you with quite a mixed result particularly if you deep dive into the nitty gritty details. Regardless I am looking forward to the announcement as it will likely pave some certainty into an uncertain situation.

The USD Index, Daily – Slugging its way down and resting before the Fed.

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