The Euro has taken a beating in the past year, dropping to its lowest value against the US dollar since November 2016. The European Central Bank’s announcement of winding down quantitative easing is expected to have an impact on global markets.

The “fomc minutes” is a blog post by the Federal Reserve Bank of New York that discusses the possibility of tapering. The announcement came just hours after Eurozone inflation fell to 0.2% in May, which was below expectations.

Euro Weakness Continues with Tapering Announcement Expected

 

  • Disappointing The Euro’s Future Is Unfavorable
  • The focus now shifts to the Federal Reserve meeting.
  • Wall Street is quietly trading ahead of a decision.

Today, the Euro currency market has shown signs of weakness as it continues to trade below the 1.16 level. These problems may be traced back to poor statistics from important countries when final figures for October are released, as well as dovish comments from authorities such as ECB President Christine Lagarde. The emphasis of the day now moves to the FOMC meeting, which is likely to culminate later in the day with important tapering announcements. Traders on Wall Street are also anticipating the Fed’s news conference and policy announcements, which may have a significant impact on market direction.

The euro has been held back as the recovery grinds to a halt.

Those who trade the Euro in forex had anticipated for a rebound in the European currency this week. Positive steps have, however, proven fleeting. On a variety of fronts, the Euro’s strength has been hampered, not least by the ECB’s tone, which has returned to being even more dovish than in recent weeks. 

In her address, Christine Lagarde underlined that an interest rate rise by the Central Bank in the next 12 months is very improbable, and that, despite present inflationary pressures, their long-term outlook remains unchanged, with criteria for an increase unlikely to be met. This follows news that key GDP data in Germany and France in October were weaker than predicted. These manufacturing PMIs have weighed heavily on the area and the Euro.

Focus on the Federal Reserve’s Announcement

Forex brokers and traders have focused their attention on what many assume will be an upcoming announcement of tapering once the two-day FOMC meeting concludes. Following an above-anticipated figure on the ADP employment front, this is largely predicted on an otherwise busy day for data with services PMIs. This might be good news for Fed Chairman Jerome Powell, who is scheduled to speak later. 

Much of the discussion is on whether or not the tapering announcement will be made, rather than whether or not the actions of printing less money have already been priced into the market. Any fears of a taper tantrum may have been allayed, given the extended build-up that has been predicted over several weeks.

Wall Street is likewise holding its breath in anticipation of tapering.

In recent weeks, the main US markets have enjoyed extremely strong bullish runs across the board. All three are close or at all-time highs, with the S&P 500 alone having had 13 positive days in the previous 15 days. 

A strong earnings season has contributed to a good mood on Wall Street; but, trading remains calm in the early hours of Wednesday as traders await Fed news. It has to be observed if policymakers will have a draining effect if certain subsidies are eliminated.

The “fomc forecast august 2021” is the announcement that the Federal Reserve is expected to make on Thursday. The announcement will be made at 2:00 pm Eastern Time.

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