How aggressive will the Fed be?

We’re seeing caution in the markets on Wednesday as the Fed kicks off a 24-hour central bank extravaganza. ​ ​

That may be me getting a little carried away but there’s no doubt that the next day or so offers crucial rate announcements from major central banks around the world and only one is expected to resist the urge to change anything. Even the Bank of Japan could be tempted to surprise the markets with a small tweak to its yield curve control policy tool, although that looks very unlikely at this point in time given recent statements.

It’s the Federal Reserve that is the talk of the town today though – as it has been since late July – as traders wait to find out whether the FOMC will opt for another 75 basis point hike or accelerate the process after the inflation setback last month.

Expectations have changed a lot over the summer but last week was a reminder that the path back to 2% won’t be pleasant and central banks may have a much bigger job on their hands than many have allowed themselves to believe. Another super-sized rate hike today and potentially a warning of more may drive that reality home.

Hawkish Fed to send bitcoin below summer lows?

Bitcoin is managing small gains on the day after suffering another setback on Tuesday. It’s slipped back towards the summer low recently and a hawkish Fed could be what pushes it over the edge. We’re seeing some near-term support around $18,250-18,500 but the key test falls around $17,500. A move below here could see it spiral lower once more with support next seen around $16,000.

For a look at all of today’s economic events, check out our economic calendar:

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 Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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