empty
 
 
You are about to leave
www.instaforex.eu >
a website operated by
INSTANT TRADING EU LTD
Open Account

18.10.202113:58 Forex Analysis & Reviews: Markets still waite for Fed's announcement

This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here.

Exchange Rates 18.10.2021 analysis

On Friday, the key US stock indexes finished with a fairly strong gain. The Dow Jones, for example, has fully resumed its uptrend. NASDAQ and S&P 500 indices could still resume their correction. The major stock indexes have been rising all last week. And it's hard to know what that was due to. However, it should also be considered that the US dollar started to fall against the euro last week. It is also dropping against the pound. Thus, it can be suggested that the two things are related. The link is probably the Fed.

It is likely that the dollar started to fall in value and stock indexes started to rise again after the publication of the Fed minutes. It contained information that could indicate to market participants that the regulator is not ready to taper its quantitative easing program. After all, the whole point of the protocol was unclear. There were no specific statements that indicated that the regulator was ready to start tapering quantitative stimulus, or that it was unwilling to do so. Therefore, it is impossible to understand how many FOMC members will vote for and against rolling back QE at the November meeting. On this background, the markets may simply have given up on the possibility that the Fed will begin tapering next month. Assuming that stock indexes were correcting in anticipation of monetary policy tightening and the USD was rising because of it, now the situation has changed.

Another explanation is also possible. However, it is about the dollar and its exchange rate, not the stock index. It can also be assumed that the markets believe that the QE tapering issue has already been resolved and therefore it does not matter at all when the decision is announced. Thus, the markets have already thought about this situation. The markets have been buying the currency amid the hearsay and now, as the moment approaches for the possible announcement of a decision on a tightening of monetary policy, traders are slowly starting to sell off the US dollar. Stock indexes, on the other hand, may have corrected on "technicals". As a reminder, even if the Fed announces a rollback of QE in November, the stimulus program will continue until at least the middle of next year. So, the US stock market will have every reason and opportunity to continue rising.

Paolo Greco
Analytical expert of InstaForex
© 2007-2024

Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.




You are now leaving www.instaforex.eu, a website operated by INSTANT TRADING EU LTD
Can't speak right now?
Ask your question in the chat.

Turn "Do Not Track" off