Forex Today: Dollar Firm Ahead of FOMC Announcement

The US dollar is quietly bullish ahead of todays expected announcement by the FOMC that its QE program will begin to be reduced.

• The FOMC statement release tonight is widely expected to include an announcement of the beginning of tapering QE. This is a major policy change which has already been “priced in” but will shift monetary policy in a less dovish/accommodative direction. Despite the threat to the support of QE to capital markets, US stocks continue to rise buoyantly to new all-time high prices. It is likely we will see higher prices in the NASDAQ 100 and S&P 500 Indices over the coming days.

• The Forex market is a little restrained, with the USD quietly bullish ahead of the FOMC meeting later today. The USD is the strongest currency right now, while the CAD is the weakest, caused partly by the fact the price of crude oil is beginning to decline from its recent peak.

• The ADP non-farm payrolls forecast and the US ISM Services PMI data will be released later today, but are unlikely to affect the USD much as the market will be so focused on the upcoming FOMC statement and press conference.

• New Zealand employment data came in much more strongly than had been expected, with the new unemployment rate at only 3.4% compared to the 3.9% which had been forecast. This suggests New Zealands economy is booming, but the data had little effect on the NZD.

• Last week saw the second consecutive global weekly rise in new confirmed coronavirus cases after two months in which cases fell steadily.

• It is estimated that 49.6% of the worlds population has received at least one dose of a coronavirus vaccination.

• Total confirmed new coronavirus cases worldwide stand at over 248.2 million with an average case fatality rate of 2.03%.

• The rate of new coronavirus infections appears to now be increasing most quickly in Austria, Barbados, Bulgaria, Chile, Croatia, the Czech Republic, Denmark, Egypt, Estonia, Germany, Greece, Hungary, Iceland, South Korea, Laos, Lithuania, Montenegro, Netherlands, New Zealand, Norway, Poland, Russia, Singapore, Slovakia, Slovenia, and the Ukraine.