As Friday’s trading session gets underway, both traders and dealers alike will be preparing for what could be a pivotal moment in US monetary policy. Today’s speech from Fed chairman Jay Powell could create a significant reaction across all financial markets.
The key area participants are focusing on is whether Powell opts to announce the commencement of tapering their QE program which sees $120 billion injected via purchases of bonds and mortgage-backed securities every month. If Powell announces tapering and provides a schedule this would likely be seen as a hawkish development and could create strong demand for the dollar. On the other hand, if he opts to remain neutral and avoids discussing tapering then we could witness a strong sell-off in the greenback.
The speech is scheduled for 3 pm this afternoon. Significant volatility is expected across all asset classes.
Have a great weekend.
Written by Viv Savani. 8:34am, August 27th 2021
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