USD: brace for the FOMC
US dollar is firm ahead of US GDP release and the Fed’s meeting. It seems that the market players are in the wait-and-see mode and refrain from big bets. Traders await hints on the timing of quantitative easing tapering. The most common opinion is that the Federal Reserve will reiterate that any reduction to the central bank’s bond purchases will depend on US economic outlook.
According to BNP Paribas, in this case the greenback won’t benefit much in the short term as “US data has been quite mixed at best, a pattern which is likely to continue in the days ahead.” UBS also expects limited USD reaction after the results of the FOMC meeting are announced. The specialists think that the central bank will probably keep its options open on the issue of when it may start tapering its bond buying.
So, there will be more volatility at 12:15-30 when GDP data and the ADP employment report are released. According to the experts, American economic growth could have slowed from 1.8% in the first 3 months of the year to 1.1% in Q2 – this is clearly not the kind of recovery the nation’s authorities are hoping for. The FOMC will release its statement at 18:00 GMT. Unlike last month the Committee won’t unveil its economic forecasts and Chairman Bernanke won’t give a press conference.