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Fed Meeting in the Crosshairs

d.molina
Dmitrij
Molina
Fed Meeting in the Crosshairs

Today at 21:00 MT, the Federal Reserve (Fed) will make public its decision on the interest rate. 

This event is of utmost importance to the U.S. and the financial world. Because of that, every asset class is sure to experience heightened volatility on news release. Moreover, the consequences of this decision will drive future market dynamics right up to the next scheduled FOMC meeting. 

Market participants and financial analysts expect the Fed to keep the rate steady. The pause would be necessary to assess the effects of the already-delivered cuts.

This would be the “rational” move. Inflation in the States ticked higher in December, reaching 2.9% y/y, up by 0.2% from the month prior. In addition to that, the last NFP report showed a very resilient labor market, adding 256K new jobs (almost 100K above consensus).

All elements would be in favor of a rate hold, but Trump is sowing uncertainty. In his own words, he “knows rates much better” than Fed chair Jerome Powell and demands an immediate reduction.

Based on the information above, traders can brace for a pretty interesting monetary policy year, where the winning assets can once again be the same as last year’s – gold and bitcoin. 

Whether the rates are lowered immediately today, or Trump presses on and further cuts will be implemented starting next time, strong fundamentals have all the chances to drive both $XAUUSD and $BTCUSD higher. At the same time, the U.S. stocks would also benefit from a more dovish monetary policy.

Whatever the course of action, now is the best time to plan your next big trade.

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