Fed Meeting Predicts Smaller Hikes Going Forward, German IFO in focus. The released minutes of last night’s meeting recapped how the market responded to the Fed announced earlier this month.
The documented minutes of the Fed meeting had mixed views about the upcoming trends of the forex market. Most officials pointed out that soon, the markets around the globe will experience smaller hikes. But several officials indicated rapid price hikes.
The overall statement narrated that 50bps is about to hit the market in December, with subsequent hikes expected to range between 25 and 50 bps
It is clearly understood that members were aware of the fact that the price hikes can peak higher than expected. But for now, forex markets appear to be favoring the lesser hike narrative over the Powell hawkish theme.
Powell’s Press Conference and the Q&A
Powell, one of the Fed members who attended the meeting, during his press conference pressed harder on the point that higher price hikes can appear probably for a lot longer.
However, as of now, the US dollar is dropping back steadily, as compared to the situation where the US dollar surged, earlier this month.
The most-recent sliding down of the U.S. dollar has quashed the rapid price hikes narrative for now.
Market Sentiment about Last Night’s Meeting Minutes
As a result of the release of the last night’s meeting minutes, the US stock markets, the NYSE and NASDAQ, peaked at their highest.
However, the indicators have shown that today’s positive showdown of U.S. markets seems to have no impact on the European markets.
The FTSE100 has suffered further declines due to the weakness of oil prices and the recent surge in Covid-19 cases in China.
The Current Situation Likely to be Favorable for Traders
As trading is quite likely to be sluggish due to the Thanksgiving break, the chances for Euro to shine are further high.
Even though the Euro has surged above 1.0400, as well as the 200-day SMA, its capacity for the further increase can further weak the U.S dollar.
The current situations hold the opportunity for investors to buy Euro as its price is going to be further above. Furthermore, the upcoming Christmas holidays will also slow down the trade intensity across the globe.
Back to Fed Meeting Discussing German IFO
German IFO Business survey reflects the fact that business confidence is projected to stay low because of the fluctuating energy prices and the expected EUR/USD price hikes.
Given all these circumstances, going forward market sentiment will become further sharper to predict.