News Ahead of FOMC — 29th July 2020

News Ahead of FOMC — 29th July 2020

Today’s Market Outlook

Asian equity markets traded somewhat uncertainly following a rather dull handover from Wall Street where participants pondered over a slew of mixed earnings and as the looming FOMC conclusion and approaching fiscal cliff added to the cautious tone. ASX 200 (-0.2%) and Nikkei 225 (-1.3%) were subdued with Australia contained by underperformance in the commodity-related sectors and tech, as well as the ongoing second wave fears which have prompted Queensland state to shut all borders to the greater Sydney area in New South Wales, while Tokyo stocks were hampered by damaging currency flows and with focus also centered on earnings updates. 

As for the currencies market, the dollar index (DXY) against six major currencies stood at 93.720, near its lowest since June 2018 this week. The EUR on the other hand is now trading at $1.1745, up slightly on the day though it has stepped back a tad from Monday’s 22-month high of $1.17815. The USD changed hands at 105.05 yen, near a 4-1/2-month low of 104.955 hit the previous session. 

On commodities, following what Goldman Sachs stated yesterday that, a potential Fed shift “towards an inflationary bias” along with record-high debt levels by the United States government is raising “real concerns around the longevity of the U.S. dollar as a reserve currency.” Such worries are spurring a rush to gold, which last stood at $1,963.5 per ounce, near its record high of $1,980.5 per ounce as of yesterday (Tuesday 28th July). 

Today’s High Impact Events

The times below are GMT+3

21.00 – FED Interest Rate Decision 

A nation’s Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. In the US, the Board of Governors of the Federal Reserve meets​ at intervals of five to eight weeks, in which they announce their latest decisions.  If rates remain unchanged, attention turns to the tone of the FOMC statement, and whether the tone is hawkish, or dovish over future developments of inflation. 

Potential instruments to Trade: USD Crosses.

21.00 – FED Monetary Policy Statement 

Following the Fed’s rate decision, the FOMC releases its statement regarding monetary policy. The statement may influence the volatility of USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish. 

Potential instruments to Trade: USD Crosses & Metals.

21.00 – US FOMC Press Conference

Following the Fed’s rate decision, the FOMC releases its statement regarding monetary policy. The statement may influence the volatility of USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish. 

Potential instruments to Trade: USD Crosses.

Coronavirus Status Update 

US COVID-19 cases rose by 54,448 (prev. +61,795) and deaths increase by 1,126 (prev. +564), while AFP later tweeted that US coronavirus deaths rose by nearly 1,600 which is the most in 2 and a half months. (Newswires/Twitter) California COVID-19 cases rose by 6000 or 1.3% (prev. +6,891, +1.5%) and deaths increased by 73 (prev. +29), although a major newswires tally later stated that California coronavirus cases increased by at least 10,063 and deaths rose by at least 171 which would be the largest on record. 

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