Market waiting for the Fed meeting results

Market waiting for the Fed meeting results

The continuous price rise of the dollar has temporarily halted when greenback dropped again against most of the major currencies during yesterday's trading session due to taking profit by investors after US dollar index measuring the strength of the dollar against a basket of currencies, goes to its highest level for 4 months. Besides, the carefulness before Fed meeting result made investors reduce bets on the greenback.

The result of periodic policy meetings of Fed will be announced today, and the agency is expected to keep interest rates at this meeting. However, investors will closely watch policy statements issued after the meeting of Fed in order to know about the current situation and prospects of the US economy. The recently released data show retail sales, consumer prices, and industrial production in the US in June rose further. Meanwhile, reports of non-agricultural jobs in June announced earlier this month, also stressed the labor market is recovering strongly and allay concerns about the deceleration of economic growth. The positive data in the US economy prompted investors to increase expectations that Fed will raise interest rates before the end of this year.

According to observers, after the relatively peaceful attitude in June, this announcement of Fed may indicate a more optimistic tone before the improvement of recent economic data. However, do not exclude the possibility that the Fed expressed a cautious view when the agency is awaiting the evaluation of the impact of the UK to leave the European Union for the outlook of the US economy before making any orientation interest rate policy in the coming period.

The yen this morning decreased sharply after Reuters reported the Japanese government is expected to issue 50-year-bonds to support the big fiscal stimulus program which will be launched. However, the currency subsequently bounced back as Japanese Finance Ministry denies rumors related to 50-year bonds. Also this morning, Prime Minister Shinzo Abe said the fiscal stimulus package in this time values over 28 trillion yen (265 billion dollars) and details will be announced next week. Information about the strong package of government will be announced before the meeting shelf of the Central Bank of Japan (BOJ) held on Friday, 29th of July. Analysts predict the BOJ will ease monetary policy further and most likely the agency will increase the size of the bond purchase program from 80 trillion yen per year to 100 thousand billion yen while reducing interest rates on deposits from minus 0.1% to minus 0.3%.

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