Quiet Markets Ahead of Key FOMC Decision

Hello traders, and welcome to FED Wednesday — the most anticipated day of the week for global markets. The U.S. Federal Reserve is set to announce its interest rate decision later today, accompanied by the FOMC statement and a press conference from Chair Jerome Powell. While no change to the benchmark rate is expected, traders will be hanging on every word for any hint about the future rate path and economic outlook.

Earlier this morning, we received inflation data from the UK. CPI surprised slightly to the upside, but not enough to generate a meaningful reaction in the markets. The British Pound did edge higher, but gains remain modest and quickly faded as the market turned its attention to the upcoming Fed event.

On the currency front, the Australian dollar and European emerging market currencies are showing relative strength this morning. Meanwhile, the American dollar is soft, joined by the Swiss franc and New Zealand dollar on the weaker end of the spectrum.

Equity indices are struggling for direction. After a brief rally in the first half of the session, indices have pulled back slightly. This indecision is likely tied to traders adopting a wait-and-see approach ahead of the FOMC.

In the commodity markets, volatility has died down, particularly in oil, which had been extremely active earlier in the week. Today, crude is treading water without clear direction. Metals are also quiet — gold, in particular, has been flat for two consecutive days as it waits for the next catalyst.

With just a few hours left before the Fed takes center stage, don’t be surprised if volatility continues to fade. Most traders are sitting on the sidelines, and the real action will likely come with the release of the statement and Powell’s press conference. Buckle up — the second half of the day could bring sharp, fast moves across all asset classes.

Source: https://www.axiory.com/analytics/market-news/quiet-markets-ahead-of-key-fomc-decision