Fed Chair More Important Than FOMC Meeting

As investors eagerly await President Donald Trump’s Federal Reserve chair nomination, the central bank’s policy-setting committee will meet quietly in the background this week. If all goes as expected, they’ll announce on Wednesday that they’re holding interest rates unchanged.Trump plans to announce his pick Thursday and is said to be leaning toward selecting Fed Governor Jerome Powell. Other candidates on his shortlist include Stanford University economist John Taylor, former Fed Governor Kevin Warsh, and current Chair Janet Yellen, whom the president has called “terrific.”The rate-setting Federal Open Market Committee will review U.S. growth that appears sturdy spite disruptions from a spate of devastating hurricanes. That leaves them on track to raise rates in December, even though inflation remains on the low side. Here’s what to watch for when the policy statement is released at 2 p.m. in Washington:Fed officials won’t publish quarterly economic projections with this meeting, nor will it be followed by a Yellen press conference. The biggest changes to the statement will probably come from an upgrade in the FOMC’s description of the U.S. economy. That would further cement the case for a move in December, though it’s unlikely that the committee will change the statement’s language to explicitly signal a rate hike. Investors view the probability of a rate increase in December at more than 80 percent, according to pricing in federal funds futures contracts.

Source: Fed Chair Drama Steals Spotlight From FOMC: Decision Day Guide – Bloomberg

Markets Rally Ahead of Fed Decision

USD/CAD – Canadian Dollar Flat Ahead of Fed Statement, Poloz Testimony

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.