FOMC's expected to cut QE
The Federal Reserve’s decision will be announced today at 19:00 GMT. Many economists expect that the central bank will announce another reduction of its bond buying program by $10 billion to $65 billion a month. Nomura thinks that the problems at emerging markets won’t prevent the Fed from tapering, because the regulator will explain them by local developments.
Some specialists say that such outcome is already priced in USD. On Jan. 21 a Wall Street Journal article by widely followed Fed watcher Jon Hilsenrath has predicted that. So, the key will be the central bank’s comments on US growth as the recent data was mixed. Barclays expects the Fed to upgrade its assessment of the economy citing the strengthening of activity data since Dec. Lloyds says that USD will be in “good shape.”
Note though, that with the Fed there’s always place for surprise. In case of no QE reduction today, US will broadly fall, especially versus gold.
Elizaveta Belugina, leading analyst