Fed preview: Data dependence and dollar liquidity – Nordea


Analysts at Nordea Markets offered a brief preview of the upcoming FOMC policy decision and expect the Fed to be on hold and reiterate its data dependence.

Key Quotes:

“The overall tone of the meeting will probably be close to the December meeting, where the FOMC said it sees the economy being in a good place and that the uncertainties related to the trade war and Brexit have faded.”

“Still, the Fed will not yet declare complete victory against external uncertainties by saying that risks are skewed to the downside. The “Fed put” is not dead.”

“The strong downward signal from leading indicators is also why stick to our forecast of another rate cut in March. Admittedly, however, our forecast looks a bit stretched, as FOMC members have not sent that dovish signals lately while markets also do note price in a cut.”

“For our March cut to materialize, we would need to see some bad upcoming macro data in particular ISM Non-Manufacturing / nonfarm payrolls or financial conditions tightening too much.”

“As Powell will likely signal that the Fed is in a wait-and-see mode, the market reaction related to the “pure” monetary policy outlook should be muted. If anything, however, we see risks tilted towards lower yields as Powell will probably keep the “Fed put” alive, while markets price in a (too) low probability of easing in H1 2020, in our view.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

AUD/USD: Weak below 0.6700 ahead of Aussie Q4 Wage Price Index

AUD/USD awaits fresh direction near seven days’ low while taking rounds to 0.6690 at the start of Wednesday’s Asian session. Broad risk-off based on coronavirus fears, bearish RBA minutes failed trade-positive nears from China.

AUD/USD News

USD/JPY: A touch lower than 110.00 amid broad US dollar strength, risk-off

USD/JPY trades mildly positive to 109.90 during the early Asian session, ahead of the Tokyo open, on Wednesday. The risk barometer recently failed to portray the market’s fears from China’s coronavirus amid broad US dollar strength.

USD/JPY News

Altcoins push hard not waiting for a Bitcoin reaction

The Altcoin market has only needed one business day to see prices rise sharply again. Bitcoin, still, has adopted the anchor function and for the moment is giving up the battle for the $10000.

Read more

Gold firmer, near $1,600/oz on coronavirus fears

Renewed fears around the Chinese coronavirus (COVID-19) have been supporting the demand for the safe haven metal in past hours, taking the ounce troy to levels just shy of the key $1,600 mark.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures