FOMC Preview: No New Signs Expected on Phasing Out

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Next Wednesday, the Federal Reserve will announce its decision on monetary policy. No change in policy is expected. Analysts TD Securities they do not expect any substantial new signals about the withdrawal of stimulus on the US economy. They see limited reaction in the markets to the FOMC meeting.

Declarations highlighted

“We do not expect any new substantial signals yet on the reduction, or the adjustment, even when the tone of the economy is more positive than in March. We expect the signaling to evolve over time as the recovery progresses, and we have just changed our forecast for the start of downsizing to March 2022 from September 2022, but we expect officials to be reluctant to say anything that can be interpreted as a reduction countdown signal. until much later this year. “

“We do not expect the Fed to announce any change in IOER or RRP rates next week, although it is likely to increase in a short time due to the downward pressure on money market yields due to the growth of bank reserves. Such changes, if they occur, should be viewed as technical adjustments. “

“The interest rate markets have anticipated the first Fed hike until March 2023; Before, it seems like a pretty high bar to overcome right now. “

“We believe that directional momentum is lacking in much of the FX complex. We believe that the EURUSD may be loosely anchored between the pre-meeting 100/200 DMA. This leaves us thinking that USDJPY will be the pair to consider. In the absence of a major short-term catalyst, the technical setup and Positioning / Value context may receive further focus. “


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