USD under scrutiny on FED monetary policy change – Market Overview

USD under scrutiny on FED monetary policy change – Market Overview

Markets await FED conclusion on stimulus developments

FED Meeting

Today is the meeting of the Federal Reserve of the United States. It is the first meeting after the appointment of Joe Biden as president. The market's attention is focused on this event, mainly due to its impact on the price of the US Dollar.

The main point will be President Powell's statements regarding the assessment of the economic situation after last month the labor market showed signs of deterioration with the first drop in job creation along with a decrease in consumption figures, and in the possibility that it indicates some date of the beginning of the withdrawal of the monetary stimulus through the program of purchase of assets, which is known as "tapering".

It should be remembered that some members of the Fed's monetary policy committee made some allusion to the tapering of the active purchasing policy, placing it at the end of this year if the economic situation began to improve as a result of the application of vaccines and with it the end of mobility restriction measures.

Any suggestion in this sense could lead investors to exit the US Treasury bonds again with the subsequent increases in yields, which would have a supportive effect on the US Dollar.

However, this possibility is less likely to be accurate, given the current uncertainty about implementing the $1.9 trillion fiscal stimulus package that has yet to pass congressional approval and could be delayed in time.

With a budgetary policy such as the one proposed by Biden in force, the Federal Reserve would have more arguments to start planning tapering in its asset purchase program, above all because of what this would imply in terms of increasing inflation expectations but also due to the recovery of the economy with which the Fed's ultra-expansive policy would no longer be so necessary.

Equities in check

Stock markets remain in an impasse awaiting better news but at the top of their trading range after the release of corporate earnings this week which is a clear sign that investors are still on an optimistic bias on the evolution of the economy.

The DowJones30 index remains within a trading range throughout January in which resistance is around 31140 points and support is about 30663 points.

In Europe today, there has been something that the market has been anticipating for quite some time. This is a verbal intervention by a member of the Governing Council of the ECB regarding the Euro.

The Dutch representative of the ECB, Klaas Knot, has made direct and decisive statements regarding the single currency's exchange rate. Knot has said that the Euro's strength would become important for the ECB if it threatened the inflation outlook, that the ECB is closely monitoring, and more importantly, that the ECB has tools to counteract the strength of the Euro if was necessary.

Although the ECB does not have a mandate to act on the exchange rate, these statements show that the euro's current levels, especially against the Dollar, are not well seen by the central bank.

The immediate reaction of EUR/USD has been adverse with a drop to the 1.2115 area from 1.2170 where the pair was at the statements' time.

The most critical level where the immediate primary support is found is 1.2065. The market will continue to be very attentive to possible additional statements in this regard that could imply further downward pressure for the pair.

Sources: Forexlive.com, Investing.com.

لا تأخذ المعلومات/البحوث التي قام بإعدادها ميغيل رويز (""محلل الأبحاث"") في الاعتبار أي أهداف استثمارية محددة أو الوضع المالي أو الاحتياجات الخاصة لأي شخص بعينه. ويُقِر محلل الأبحاث المسئول بشكل رئيسي عن محتوى هذا التقرير البحثي، جزئياً أو كلياً، أن وجهات النظر حول الشركات وأوراقها المالية الواردة في هذا التقرير تعكس بدقة وجهات نظره الشخصية فحسب، وبالتالي فإن أي شخص يتصرف بناءً عليها يفعل ذلك على مسئوليته الخاصة بشكل كامل.

لا يمثل البحث المقدم هنا آراء JME Financial Services (Pty)Ltd كما لا يعتبر دعوة للاستثمار مع JME Financial Services (Pty)Ltd. يُقِر محلل الأبحاث أيضاً أن جزء من التعويض الذي يحصل عليه، أو سيحصل عليه، بشكل مباشر أو غير مباشر، يرتبط بالتوصيات أو الآراء الواردة في هذا التقرير.

اعتباراً من تاريخ نشر التقرير، لا يمتلك محلل الأبحاث وزوجته/زوجها و/أو أقاربه الذين يعتمدون عليه في أمورهم المالية، حصصاً في الأوراق المالية الموصى بها في هذا التقرير (تشمل ""الحصص"" الملكية المباشرة أو غير المباشرة للأوراق المالية).

لا يعمل محلل الأبحاث لدى JME Financial Services (Pty)Ltd. ننصحك بطلب الحصول على استشارة من مستشار مالي مستقل بخصوص مدى ملائمة الاستثمار، بموجب ترتيبات منفصلة، والتأكد من ملائمته وتوافقه مع أهدافك الاستثمارية المحددة، وضعك المالي أو احتياجات المالية الخاصة قبل الالتزام بالاستثمار.

تحكم قوانين جمهورية جنوب أفريقيا أي مطالبات تتعلق بمحتوى المعلومات/الأبحاث المقدمة أو تنشأ كنتيجةً لها.

تعمل JME Financial Services (Pty) Ltd ، التي تعمل باسم ZA.CAPEX.COM ، كوسيط بين المستثمر وشركة Magnasale Trading Ltd ، نظير العقد الذي يشتريه المستثمر من خلال ZA.CAPEX.COM ، المرخص له و خاضعة لرقابة قبرص للأوراق المالية. وعمولة الصرف برقم ترخيص 264/15. Magnasale Trading Ltd هو مدير العقود مقابل الفروقات التي يشتريها المستثمرون.