The markets turn their attention to all-important Fed meeting – Market Overview

The markets turn their attention to all-important Fed meeting – Market Overview

Today the markets have their eyes set on Fed’s Monetary Policy Committee scheduled for later this afternoon.

No change is expected in the monetary policy regarding interest rates and the Q.E. that maintains its unlimited asset purchase rate.

However, the Fed's MPC Meeting is crucial. It could provide a growth forecast for the economy, a potential forecast on changes in interest rates and insights into possible rises in interest rates for long-term bonds.

The economic forecasts are expected to be somewhat more positive than in the previous meeting due to the rapid administration of vaccines and mainly due to the approval of the fiscal stimulus package that led to massive injection to the North American economy.

As for interest rate hikes, we could see some Federal Reserve members advancing the dates of interest rate hikes for 2023. Remember that on previous occasions, they did not think interest rates required hikes at least until 2024.

This could be interpreted in the market as a change towards a more "hawkish" bias, but it will depend on how many Fed members decide to step forward. Potential hawkish bias may positively impact the U.S. Dollar, a currency that somehow already anticipates a change in bias mainly motivated by increases in long-term interest rates.

In this sense, and if this were to happen, EUR/USD, which traded around 1.1900 in the last two days, could resume its downward path where it would technically find its first support at the 1.1850 area.

But Powell's speech will undoubtedly be the markets’ main attraction. Suppose the Fed chairman shows concern about rising long-term bond interest rates and manifests a clear intention to avoid that from happening by implementing measures to control the yield curve. In that case, there could be a downward movement in yields that would negatively affect the dollar's price, especially against the yen. USD/JPY has reached highs in the 109.36 area and is in an overbought zone on the daily chart, with an RSI at the levels of 80 and threatening a bearish divergence.

On the other hand, if Powell isn’t worried about the current evolution of long-term interest rates and does not show any intention to avoid it, the treasury bonds' yields could continue to rise, potentially hitting the 2% mark in the case of the 10-year bond. This would lead to upward pressure from the U.S. Dollar that would resume its upward movement that began in January.

Sources: Bloomberg, Investing.com.

Maklumat/penyelidikan ini disediakan oleh Miguel Ruiz (“tpenganalisis penyelidikan”) dan tidak mengambil kira objektif pelaburan tertentu, keadaan kewangan atau keperluan khusus individu. Penganalisis penyelidikan bertanggungjawab terhadap kandungan laporan penyelidikan ini, samada sebahagian atau keseluruhannya, memperakui bahawa pandangan mengenai syarikat dan sekuriti mereka yang dinyatakan dalam laporan ini jelas mencerminkan pandangan peribadi dan pedagang bertanggungjawab sepenuhnya ke atas risiko mereka sendiri.

Penyelidikan yang disediakan bukanlah pandangan JME Financial Services (Pty) Ltd ataupun undangan untuk melabur dengan JME Financial Services (Pty) Ltd. Penganalisis penyelidikan juga memperakui bahawa tiada sebahagian daripada pampasannya, adalah, atau akan, secara langsung atau tidak langsung, berkaitan dengan cadangan atau pandangan tertentu yang dinyatakan dalam laporan ini.

Sehingga tarikh laporan diterbitkan, penganalisis penyelidikan dan pasangannya dan/atau saudara-mara yang bergantung kepada penganalisis penyelidikan, tidak memegang kepentingan dalam sekuriti yang dicadangkan dalam laporan ini (“kepentingan” termasuk pemilikan langsung atau tidak langsung terhadap sekuriti).

Penganalisis penyelidikan tersebut bukanlah di bawah JME Financial Services (Pty) Ltd. Anda digalakkan mendapatkan nasihat daripada penasihat kewangan bebas mengenai kesesuaian pelaburan, di bawah penglibatan berasingan, seperti yang anda anggap sesuai dengan objektif pelaburan tertentu anda, keadaan kewangan atau keperluan kewangan tertentu sebelum membuat komitmen untuk melabur.

Undang-undang Republik Afrika Selatan akan mengawal sebarang tuntutan yang berkaitan dengan atau yang timbul daripada kandungan maklumat/ penyelidikan yang disediakan.

JME Financial Services (Pty) Ltd, beroperasi sebagai ZA.CAPEX.COM, bertindak sebagai perantara antara pelabur dan Magnasale Trading Ltd, rakan kontrak untuk perbezaan yang dibeli oleh pelabur melalui ZA.CAPEX.COM, yang diberi kuasa dan dikawal selia oleh Cyprus Securities. dan Suruhanjaya Pertukaran dengan nombor lesen 264/15. Magnasale Trading Ltd adalah prinsip utama CFD yang dibeli oleh pelabur.