The U.S. Dollar is trading in mostly familiar ranges ahead of tomorrow’s key risk event of the week in the Federal Reserve’s policy decision and press conference
While it is expected that a 25-basis-point interest rate cut will be the result, the more important things to watch for will be the comments related to future policy, answers to media inquiries from Chairman Jerome Powell, and the overall tone whether it is “dovish” or “hawkish.” Ever since the Fed decided to begin their expansionary cycle by reducing borrowing costs, the U.S. Dollar’s response has not been a negative one, instead rising in value by over 2.0% since mid-September per the Bloomberg Dollar Spot Index. September and October gatherings concluded in “hawkish cuts.”
We shall see how markets interpret it all as the year comes to a close. In terms of data points, we are still awaiting releases for certain items, but we will get important labor measures at 10AM in the form of October JOLTS (Job Openings and Labor Turnover Survey) measuring openings, quitting, as well as layoffs. This may affect how some voting members of the FOMC feel on Wednesday as officials have mixed feelings and varied takes on the economy. Markets will question the lack of consensus if it materializes as well. For now, the Buck is still hovering around its weakest point since end of October.
What to Watch This Week…
- FOMC Meeting tomorrow 2PM
- Monex USA Online is always open
EUR ⇑
The Euro is muted at the moment, but the currency was looking to improve after statements pointing at how the European Central Bank may be looking to be contractionary going forward. ECB Board member Isabe Schnabel said that the central bank’s next move is likely going to be to hike interest rates. German-bond yields and overall, for the Euro-zone aggregate treasuries went up as a result. Next week’s plethora of data will aid in painting a clearer picture of the euro-zone’s health and if the ECB is right in keeping the financial environment as it is.
CHF ⇓
The Swiss Franc fell to its weakest level in around two weeks after having jumped throughout November. The typical safe-haven asset fluctuated all over the place as a result of nervousness surrounding relations with the U.S. and tensions alleviated, which eventually led to the announcement of a trade deal that mostly helped in preventing further increases in duties going forward. In two days, the Swiss National Bank will meet and is expected to defend its 0.0% interest rates while markets await explanation for why they do not want to reduce costs going forward. There is chance for the Franc to appreciate further.
