The U.S. Dollar is trading in choppy ranges ahead of the much-awaited Federal Reserve monetary policy decision this afternoon.
Overview
At 2 PM EST, the FOMC is expected to hike its Federal Funds Rate by another 75-basis-points. More importantly, markets are eager to find out if Fed Chairman Jerome Powell hints at a potential “Fed pivot” on tightening during his press conference. Throughout reports and analyses this morning, many traders see this talk of a change of heart as overblown. We believe that talks of slowing down to 50-bps hikes into 2023 may come to that table, but we have also seen the Fed consistently believing their contractionary path is the right one.Earlier, the release of ADP Employment numbers for October came in at 239K added jobs when only 185K was expected. The data shows that with employment growing and wages advancing some, inflation remains stubborn and not declining. We will see what the Fed has to say to address the reality that their efforts may not be causing the price pressures they hoped for while being right about the U.S. economy’s ability to withstand all the rate-hiking that has already taken place.
What to Watch Today…
- 2 PM EST – FOMC
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EUR ⇑
The Euro stayed up this morning based on growing optimism around the globe that China will start opening up to all kinds of activity and end Zero-COVID policies. It is possible this will revive all kinds of global manufacturing and engagement and deter countries from a drag on growth.
Today’s German Manufacturing Purchasing Managers Index failed to meet expectations of a lesser contraction and remained to decline some. Overall, for the Eurozone, the PMI reading came in exactly as expected. The war in Russia has made Europeans question how much Chinese influence there should be in their economy as they also support Putin, who is the culprit of an unnecessary crisis.
GBP ⇑
Sterling is also slightly up ahead of today’s Fed and tomorrow’s Bank of England meetings. As Rishi Sunak has taken hold of his government, the budget and the need for taxes have been received favorably across markets and have turned Pound from doom to higher levels. The BOE has previously warned about the fragile state of the economy following a devastating pandemic.
On top of that, many policymakers and leaders are pushing for amending relations with the EU after Brexit has made trade more difficult and with reduced volumes by one-fifth of what it used to be.
