Daily Brief, Jan 29: Economic Events Outlook – Fed Rate & FOMC Conference in Highlights - Forex News by FX Leaders
Powell sounded hawkish yesterday but today the USD is pulling back

Daily Brief, Jan 29: Economic Events Outlook – Fed Rate & FOMC Conference in Highlights

Posted Wednesday, January 29, 2020 by
Arslan Butt • 2 min read

Good morning, traders.

On Wednesday, the economic calendar is fully loaded with high impact economic events, where the Federal Reserve interest rate decision will be the main highlight of the day. Federal Reserve isn’t expected to hike or but the interest rate in today’s, and it may leave rates at 1.75%. However, the FOMC Press Conference will be worth monitoring today. The Fed Chair Powell may discuss its plan towards the next policy decision.

Overall, sentiments of no rate change until mid-2020 are pretty strong, but any change in sentiment today can potentially shake the overall market.

It’s a big day from the fundamentals’ viewpoint as most traders will focus on the FOMC meeting minutes and Crude Oil inventories data from the US. Currently, the market is pricing in dovish FOMC meeting minutes because the Fed Chair Jerome Powell said last time that they are likely to keep rates on hold until mid-2020. Chances are high that the Fed Chair may keep the same stance today. If that happens, the dollar weakens further, but sooner or later we can expect profit-taking by dollar selling and GOLD buying. Let’s keep an eye on all dollar related securities today.

Watchlist – Top Economic Events to Follow Today

Fed Monetary Policy Decision – 19:00 GMT

Following three back-to-back rate cuts, the world’s most influential central bank indicated it would take a prolonged pause. Since then, executives have repeated this message that the Fed interest rates are “appropriate.”

Nonetheless, traders will examine every information in the accompanying Fed rate statement, which is coming out from Jerome Powell. In the prior decision, Powell reaffirmed his stand that the odds for hiking the interest rates are higher than the one for tapering them.

Inflation would first require to improve ere the Fed would consider increasing financing costs sustainably. Nevertheless, a weakening economic forecast could trigger a cut.

Markets will be following his advice about this issue and also regarding the new average jobs report, the good growth rates, and faded trade stresses between China and the US. An upbeat tone could boost the dollar while a downbeat one could reduce it.

USD – Crude Oil Inventories – 16:30 GMT

The Energy Information Administration is due to release the inventory data with a forecast of 0.7M build in inventories vs. -0.4M inventories draw during the previous week.

As per the API (American Petroleum Institute) report, crude oil stocks slipped by 4.3 million barrels for the week ended January 24, which is a good sign as it reflects a rise in oil demand.

For now, WTI crude oil is facing slight bullish bias ahead of the EIA report as traders are expecting the EIA to report a draw in inventories due to its positive correlation with the API report.

That’s it for now, but do check FX Leaders’ economic calendar for the live coverage of these significant events.

Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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