FOMC Preview: Action granted, upbeat growth figures to put USD under pressure

FXStreet Team FXStreet

The Federal Open Market Committee (FOMC) is undergoing a monetary policy meeting and will announce its latest decision today at 18:00 GMT. Meanwhile, the US dollar has been on a franc decline ahead of the event, undermined by a better perception of risk, FXStreet’s Chief Analyst Valeria Bednarik informs.

Key quotes

“The Fed is widely expected to keep rates on-hold, alongside the hip load of stimulus programs, meant to keep the economy afloat throughout the ongoing coronavirus-related crisis. The focus, then, will be on Fed Chairman Jerome Powell’s statement and press conference, as speculative interest will try to figure out what policymakers could do next.”

“Regarding growth, there are no doubts that the economy will contract this year, although is yet to be seen the extent of it. A mild recovery is expected for 2021, and the Fed will have to continue to support the economy until there are signs of economic recovery.”

“Up to now, the market is expecting rates to remain at the current levels until at least the first quarter of 2021. Any sign that rate hikes could take place before that they would be quite a positive clue.”

“Despite the gloomy economic figures from the last couple of months, the focus shifted to economic recoveries. It will be the speed of this last in the eyes of the FOMC that will move the market. Further rallies in Wall Street on an optimistic outlook, will likely keep the greenback under pressure.”

“Risk-off after the announcement would favor safe-haven assets, the dollar included. Gold could be the biggest winner in this scenario, as its refugee condition will couple with the excess of liquidity provided by central banks.”

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

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