Today’s Forex: Fed policy decisions and Powell’s press conference are everything.

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Investors look forward to key macroeconomic data releases and policy announcements from the US Federal Reserve (Fed) in February. Before Thursday’s policy meeting of the European Central Bank, Eurostat will release January inflation figures. The January Manufacturing PMI and ADP private sector employment report will be on the US economic docket. FOMC Chairman Jerome Powell will deliver his remarks on the policy outlook and respond to questions from the media at 1930 GMT following the release of the Fed’s policy statement and interest rate decision at 1900 GMT.

Preview of the Federal Reserve: The Good, the Bad, and the Ugly Reasons for the Rise of the US Dollar.

 

After ending a three-day winning streak on Tuesday, the US Dollar Index remains subdued near 102.00 early on Wednesday. It was difficult for the US Dollar to outperform its rivals in the American session due to the positive shift in risk sentiment following the Employment Cost Index data, which showed a slower-than-expected increase in the fourth quarter. Meanwhile, Wall Street’s main indexes posted strong daily gains and the benchmark 10-year US Treasury bond yield fell to 3.5%. US stock index futures are trading slightly lower today as investors stay away from high-profile events.

New Zealand’s data showed that the unemployment rate increased slightly to 3.4% in the fourth quarter from 3.3% in the third quarter during Asian trading hours. The Employment Change came in at +0.2% during the same time, which was lower than the market’s expectation of 0.3%). In the early hours of the morning in Europe, NZD/USD came under bearish pressure and fell to 0.6400 before recovering to 0.6450. In the meantime, despite a modest improvement to 49.2 from 49 in January, the Caixin Manufacturing PMI in China failed to elicit a significant market response.

On Tuesday, the EUR/USD pair made a few small gains per day, but it lost its momentum before reaching 1.0900. According to the Harmonized Index of Consumer Prices, inflation in the Euro area is expected to fall from 9.2% in December to 9% in January.
GBP/USD entered a consolidation phase slightly above 1.2300 early on Wednesday after closing the third consecutive trading day in negative territory.

On Tuesday, the USD/JPY pair didn’t make a big change in either direction, so it ended the day pretty much the same. Mid-week, the pair continues its sideways grind above 130.00. As anticipated, the January Jibun Bank Manufacturing PMI in Japan came in at 48.9.

After falling to $1,900 on Tuesday, the price of gold rose dramatically. XAU/USD is holding steady at around $1,930 despite having trouble gaining any additional bullish momentum.

Bitcoin made a small recovery on Tuesday after a sharp decline on Monday. BTC/USD is trading around $23,000 in a narrow range early Wednesday. After falling to as low as $1,500 earlier in the week, Ethereum recovered and gained more than 1% on Tuesday. The ETH/USD pair was trading at $1,575 at the time of press.

About the author

Nafees Saifi // entrepreneur, author, trainer, and stocks and FX trader. 
Nafees Saifi is a professional FX trader from, India. Nafees has extensive experience trading commodities, bonds, and equity futures in the Asian, European, and US markets. Nafees holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.

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