23.09.201913:31 Forex Analysis & Reviews: You should not expect noticeable changes in the foreign exchange markets in the near future (We anticipate a continued decline in theAUD/USD pair and the beginning of the fall of the GBP/USD pair)

Observing everything that is happening, we can say that the markets actually took a wait and see attitude. This is caused, as if by accident, in the abandoned words of the head of the Federal Reserve J. Powell, who made it clear that the regulator may consider in the coming days the possibility of resuming an increase in the balance. Immediately after that, the markets began to exaggerate the topic of the beginning of the next economic support program (QE4).

An important signal that the Fed will have something on this issue in October was the liquidity crisis in the local financial system. The Central Bank had to carry out REPO traces to pay off the failure of a lack of dollars in the banking system, which brought to life the subject of the need for incentive measures. It is estimated that an order worth $400 billion is needed to normalize the spread ratio of FF-IOER. In fact, the liquidity crisis in the financial system, as well as noticeable disagreements in the Fed regarding the assessment of the state of the American economy and its prospects, can indeed become a catalyst for QE4.

Also, the fact that the US is gradually starting to enter the recession, we pointed out this summer. Our expectations are already confirmed by the statements of some representatives of the Federal Reserve. Thus, the President of the Federal Reserve Bank of St. Louis J. Bullard said in his speech last week that he considered it necessary to cut interest rates at the last meeting immediately by 0.50%. He substantiated this opinion with expectations of a noticeable slowdown in the growth of the American economy and its entry into a recession in the near future.

In general, assessing the emerging economic situation in the United States, as well as liquidity problems in the local financial system, it can be assumed that the high probability of the announcement of new stimulus measures will have a wide negative impact on the dollar; which, on the one hand, is justified. Yet, at the same time, one more important point that should be taken into account is that the largest world banks will not sit still. They will continue or begin to cut interest rates in order to compensate for the loss of exports from their countries to the world market. So, before the likely start of QE4 by the end of this year, the dollar will be traded as a whole in the lateral range to the basket of major currencies.

Forecast of the day:

The GBPUSD pair began to adjust after reaching a local maximum of 1.2580 as it is fully playing out the topic of upcoming talks between Britain and the EU on the topic of the country's withdrawal from this organization. We believe that the uncertainty of their outcome may have a negative impact on the sterling rate. Given this, we believe that fixing the pair below 1.2500 may lead to a continued decline to 1.2285.

The AUD/USD pair is trading below the level of 0.6785. The expectation of a decrease in RBA interest rates in October will pull the pair further down. Fixing the price below the level of 0.6785 will lead to a fall in the pair to 0.6700.