The opinions of participants were divided while waiting for the Fed's final decision on monetary policy in the market.
On the one hand, most investors still believe that the US regulator will stick to a super-soft monetary rate for a significant period of time, since the national economy is recovering unevenly, and inflationary pressure is not critical despite a sharp growth during the previous month. On the other hand, other market players are beginning to believe that the Fed will begin to gradually reduce the volume of redemption of government bonds by the beginning of 2022. So, Goldman Sachs believes that the bank will begin to reduce the volume of treasury repurchases by $ 15 billion per month in early 2022. It can be recalled that it buys assets every month in the amount of $ 60 billion.
In this case, Goldman Sachs believes that the Fed, represented by its leader J. Powell, can signal the markets about this today. We will learn about this tonight after 18.30 Universal time at a press conference following the meeting. We believe that such a possibility exists, albeit low. There is doubt that the Fed Chairman will shock the financial markets again now, after he and other Fed members have barely managed to calm them down in the last two months following an uncontrolled surge in Treasury yields earlier this year.
We believe that this topic will be unlikely to be discussed directly, but if Powell mentions it, it will be only indirectly. It is assumed that he will only talk about the prospective recovery of the country's economy and its economic growth. In our opinion, he will try to reassure the markets again that the current monetary policy of the regulator will be held for an extremely long period of time. At the moment, the Fed does not need the dollar's strengthening and a sell-off in the government debt market, while US Treasury yields increase.
Based on the above, it can be expected that the continuation of Powell's "dovish" rhetoric, as well as the regulator's final statement, will lead to a new wave of growth in demand for risky assets, company shares, with a simultaneous wave of depreciation of the US dollar. Nevertheless, we are still awaiting the speech of the Fed Chairman and then make appropriate decisions on transactions.
Forecast of the day:
The EUR/USD pair is trading in a narrow range of 1.2055-1.2090 in anticipation of the result of the Fed's monetary policy meeting. We believe that any hint of a possible change in the timing of the government bond repurchase will put pressure on the pair, and it will break through the lower limit and rush to 1.2025.
At the same time, the continuation of the "dovish" tone in Powell's speech and the absence of any hints of a change in the monetary policy rate will lead to the continuation of the pair's growth first to the level of 1.2115, and then to 1.2175.
The GBP/USD pair is also trading in the range of 1.3855-1.3925. We believe that Powell's "dovish" speech will let the pair increase to the level of 1.3925. After its breakdown, further growth can be expected to the 1.4000 mark. Any concrete hints of a tighter monetary policy in the future will push the pair down to 1.3795.
