Trade ideas thread - European session 27 January 2021
Daily thread to exchange ideas and to share your thoughtsThe dollar is keeping steadier today after a decline yesterday, as we count down to the first FOMC meeting decision of the new year.
Major currencies are little changed in general and equities appear to be more lackluster as well, with S&P 500 futures keeping flatter - down by 4 points or 0.1%.
All eyes are on the Fed but they are largely expected to offer a timely reminder to the market that they won't be changing policy stance any time soon and will look past any expected temporary rise in inflation pressures this year.
In short, the statement and Powell's press conference is likely to be somewhat of a repeat from his remarks two weeks ago. In case you missed that:
That is likely to reaffirm that the Fed put is well and truly alive and while the straightforward reaction may call for a weaker dollar and stronger risk assets, the market may still want to read between the lines on any remarks about the economy.
If the Fed views that economic activity is expected to rebound more strongly in the coming months, that could pose a challenge about what they actually would do as compared to what they say they are going to do instead.
For some context, the Fed has never had a good track record of fighting back when being bullied by the market. So, there's that to consider in case.
But the simplest case may be that the market will just get swept up by talk of easy money and stick with the game plan through Q1 2021 at the very least.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.