The dollar and euro are traded cautiously on Wednesday. The reason was that the investors refrained from taking risky bets a day ahead of a landmark speech by Federal Reserve Chair Jerome Powell. It is one of the most crucial moments this week.
The speculations are made everywhere. People talked about it. Powell may unveil a softer policy stance on inflation at the Jackson Hole annual retreat on Thursday. It means that the investors brace for possible new Fed moves to shore up the US economy.
Targeting average inflation over time rather than setting a fixed goal of 2%. It means lower interest rates will exist for a longer time. Is it a good thing or not? Find out more about the analysis and facts below.
The Chance of Rebound
If the Fed confirms the move, the greenback will have less chance of a meaningful rebound in the near term. Neither the announcement of a policy change nor the lack of announcement of a policy change is expected to give a strong effect on trading.
The dollar index, which tracks the value of the greenback against major peers, was noted rising 0.1% to 93.11. It was after taking a hit on Tuesday following data showing US consumer confidence fell to its lowest level in more than six years.
The late Wednesday data is expected to show growth in US durable goods orders slowed in July. That was highlighting concerns from policymakers about the economy. On the other hand, a better-than-expected reading will make investors feel better.
Dollar Movement in Other Currencies
Against the euro, the dollar was at $ 1.1818. It was a 0.4% drop in the previous session. The yuan rose to a seven-month high of $ 6,8908 after US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal.
That was easing concerns about a diplomatic deadlock between the world's two largest economies. The British pound was trading around $ 1.3135 after rising 0.7% against the dollar. Sterling managed to ignore a lack of progress in trade negotiations between Britain and the European Union.
The US dollar was flat at the start of the week. Based on data, the US economy created fewer jobs than expected in December. That information suggests that the Federal Reserve has yet to change its monetary policy. It is a strong sign to know.
The movement of USD is also dynamic like other types of currencies. It can be influenced by many factors. Traders or investors can maintain it by seeing various sources. Those are like the political news, data, and for sure from FOMC.
The Crucial Role of FOMC
Do you know about the FOMC? FOMC or the Federal Open Market Committee is the policy meeting board of the United States central bank. The policies produced by the FOMC tend to have a global impact and will always be preceded by rumors.
The market can be shaken since before the publication of the FOMC announcement. It means that the FOMC is one of the important announcements that must be followed by traders, especially those dedicated to fundamentals. Then how can the FOMC be a market trigger?
Structurally, the Federal Open Market Committee (FOMC) is a committee consisting of high-ranking United States central bank officials called the Federal Reserve (The Fed). The FOMC holds regular meetings to determine changes to US monetary policy, including interest rates, monetary stimulus, bond purchase programs, etc.
Decisions announced after the FOMC meeting applies only to the territory of the United States. However, investors will use it as a basis for making their investment decisions. The FOMC meeting decision can affect the strength of the US dollar exchange rate and more.
