The dollar is on the rise in anticipation of key meetings between the U.S. and China, which could have a huge impact on global markets going forward. Cryptocurrency trading was up 5% as well, with Bitcoin surging 4%.
The “forex vs stocks” is a comparison between the forex market and the stock market. The dollar has been gaining ahead of key meetings that will be taking place in the near future.
Coming Soon: A Fed Policy Update and an ECB Meeting
Inflation in the United States is a major problem that must be addressed.
With Anticipation, the Stock Market Is Quiet
On Tuesday, the Euro FX market gained traction, trading over 1.13 at one point. With the return of US Dollar strength to a jittery market ahead of the Fed policy update, this has been pushed back. Most analysts predict this statement to be hawkish, paving the way for a faster reduction of asset purchases and an interest rate rise in the face of rising inflation numbers. Meanwhile, early trading on Wall Street remains calm as these important judgments are expected later in the day.
Policymakers are gearing up for a series of large gatherings.
If trading the Euro, Pound, or US Dollar, forex traders will keep a watch on meetings and statements from officials on both sides of the Atlantic. All eyes are on the Federal Reserve today as they prepare to announce whether or not they plan to taper bond purchases in their policy update. This would also open the path for interest rate hikes later this year. At the end of the policy meeting, Federal Reserve Chair Jerome Powell is scheduled to address.
The surge in Dollar strength and the US Dollar Index would appear to show that traders are already pricing in tapering and rate rises as the US continues to struggle with high inflation rates. On Thursday, the ECB will meet with an increasingly divergent perspective. The region’s dovish reaction has persisted, and this is largely predicted to continue.
Inflation is a major concern.
While previously stated, inflation figures have continued to rise even as Omicron and Delta variations wreaked havoc on many people in the US and throughout the globe. This was illustrated once again on Tuesday, when producer prices rose faster than economists had predicted. It was the largest yearly increase in the PPI in almost a decade.
As a result, forex brokers have seen another shift back into the safe-haven Dollar as the Fed prepares to make major statements. This is the first of many policymakers who will talk this week. The ECB, as well as the Bank of England and others, are anticipated to address their policies in the coming days.
Stocks are choppy ahead of the Fed’s policy announcement.
Despite the fact that many investors seem to have factored in the likelihood that tapering will accelerate and interest rates will inevitably increase sooner rather than later, equities on Wall Street have moved slowly in the early hours. None of the main indicators have changed much.
Traders will surely be waiting for Jerome Powell’s remarks, as well as the consequences of any real-time policy changes. The Fed is largely expected to quadruple the pace of bond purchases in order to complete the asset purchases by March of next year, with the first interest rate rise as early as June 2022.