The Federal Reserve Federal Open Market Committee meeting announcement is due Wednesday 28 April:
- statement at 1800 GMT
- Powell press conference at 1830GMT
Earlier previews are here:
MUFG analysts are expecting the USD negative bias to continue … but…
The main event risk for the US dollar … which could potentially challenge the bearish trend currently in place is the latest FOMC meeting on Wednesday.
- The Fed is expected to acknowledge building evidence of a robust economic recovery at the start of this year. The better than expected economic data flow has lifted the consensus forecast for GDP growth in Q1 to almost 7% annualized. However, it remains too early for Chair Powell to change his dovish stance.
- By the summer the Fed will likely have enough evidence of a robust recovery to suggest that tapering could be on the horizon.
- The latest Bloomberg survey has revealed that about 45% of US economists now expect the Fed to begin tapering QE in Q4. However, the Fed is then expected to wait until 2023 to begin raising rates with the median forecasts set at 0.75% by the end of 2023 and 1.25% by the end of 2024.
- For the US dollar to derive more support in the week ahead, the Fed would have to tweak the ‘some time’ guidance to bring forward QE tapering expectations further. Without a hawkish surprise, the US dollar should continue to trade on the back foot for now.
(bolding is mine … probably not gonna happen but something to watch for)