FOMC November Meeting Key Points
- Traders are questioning if the current pace of 25bps rate cuts at each Fed meeting is too much.
- Around a 1-in-10 chance that the Fed will keep interest rates unchanged in November, contingent on strong economic data.
- The US Dollar Index’s technical bias remains upwards as long as it stays above key levels.
Successful traders must stay vigilant to market shifts, much like a skilled sailor navigating changing winds and currents.
Following Federal Reserve Chairman Jerome Powell’s emphasis on the labor market over inflation at the Jackson Hole speech in August, the central bank executed a 50bps interest rate cut last month. Despite initial 50bps cuts, Fed speakers have indicated a shift towards 25bps rate cuts moving forward.
Recent robust US economic data, such as exceptional job reports and strong retail sales, suggests a stronger economy than previously thought. This has led traders to reconsider the pace of rate cuts set by the Fed.
Factors Influencing Fed Decision:
- Positive economic data showing a strong US economy.
- Potential 1-in-10 chance of the Fed keeping rates unchanged in November.
For the Fed to maintain current rates, a series of outstanding economic reports are needed. Notable upcoming releases include initial unemployment claims, Core PCE report, and the October NFP report.
Predicting Fed Decision:
- Probability of Fed hold in November stands at ~6% based on current economic trends.
- A Fed pause would require consistent strong economic data leading up to the November meeting.
Regardless of the November decision, interest rates are projected to rise in the coming years, providing support to the market.
US Dollar Technical Analysis – DXY Daily Chart
The US Dollar Index (DXY) has experienced a significant surge recently, trading above its 200-day MA. This uptrend is supported by strong US data and easing measures from major global economies.
Looking ahead, some profit-taking is possible, but the technical bias for DXY remains bullish as long as it holds above key support levels.
Analysis:
The Fed’s upcoming decision on interest rates in November is crucial for the economy and financial markets. Strong US economic data has led to speculation about a potential pause in rate cuts. Traders are closely monitoring key indicators to gauge the Fed’s next move, which will impact market sentiment and investment strategies.