1 min to read
Exercise Caution Ahead of Tonight's US FOMC Meeting
Leading to Subdued Activity in Major Currency Markets.
“Exercise Caution Ahead of Tonight’s US FOMC Meeting, Leading to Subdued Activity in Major Currency Markets”
The highly anticipated US Federal Open Market Committee (FOMC) meeting is set to take place tonight at 3 a.m. (Japan time), followed by a press conference featuring Fed Chair Powell at 3:30 a.m. Given the prevailing market sentiment, which leans towards maintaining the status quo, yesterday’s slightly underperforming US Consumer Price Index (CPI) figures have further solidified expectations of no policy changes. Currently, there is a strong consensus, around 90%, in favor of the Fed maintaining its current stance.
While the upcoming meeting is not anticipated to bring many surprises, there remains a cautious sentiment in certain quarters. This caution stems partly from the recent unexpected interest rate hikes by the Reserve Bank of Australia and the Bank of Canada, which went against the prevailing expectations of unchanged policies. Moreover, should the expected status quo be confirmed this time, market attention will turn to the possibility of a rate hike in July, which has gained support from over half of the market participants. Market participants will closely scrutinize the statements, press conference, and economic outlook presented by the FOMC. Given the divergence in outlooks at this stage, the market is likely to exhibit hesitancy until the outcome becomes known.
Shifting focus to the currency market, the USD/JPY pair experienced a correction in the Tokyo market after its ascent from the 139.00 yen level to the 140 yen range during the previous day’s overseas session. The pair briefly dipped below the 140 yen threshold in the morning before stabilizing within the range of 140 yen. With participation from London traders providing support, there has been some buying interest, and the pair is currently trading around 140.10 yen.
Similarly, the EUR/USD pair displayed limited movement around the 1.0790 mark but also witnessed some dollar buying, following the same pattern as the USD/JPY pair. Consequently, the pair declined to the 1.0770 level, with the participation of London traders contributing to the overall market dynamics.
Visit XM Official Website.
