The dollar traded steady on Monday ahead of the U.S. Federal Reserve’s January policy meeting later this week, while bitcoin lay bruised near a six-month low hit over the weekend, hurt by a sell-off in technology stocks.
“The Fed has got markets by the leash. And this week, it will once more tug and yank,” said Frederic Neumann, HSBC’s co-head of Asian economics research, in a morning note.
Attempts to predict when and how quickly central banks will raise interest rates and conclude stimulus programmes launched when COVID-19 hit are a major factor driving currency markets at present.
“What will prompt investors to scurry about will be the guidance Chair Powell might give at his press conference about quantitative tightening later in 2022,” Neumann said, adding that he was not expecting a policy change.
The Fed’s rate-setting Federal Open Market Committee kicks off its two-day meeting on Tuesday with some analysts starting to speculate that it is possible, though unlikely, that it will raise interest rates for the first time since the pandemic began.
The main driver of currency markets today is the ability to predict when central banks will raise interest rate and launch stimulus programmes that were launched after COVID-19.
Neumann stated that investors will be compelled to look for guidance from Powell at his press conference on quantitative tightening later this year in 2022. He also said that he wasn’t expecting any policy changes.
On Tuesday, the Fed’s rate-setting Federal Open Market Committee begins its two-day meeting. Some analysts are beginning to speculate that it may raise interest rates for only the second time since the pandemic.
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