Traders and dealers alike will all be braced for tonight’s Federal Open Market Committee announcement, where it’s expected Jay Powell will provide further information on the central bank’s plans to scale back their mammoth $120 billion per month of asset purchases, split between government bonds and mortgage backed securities.
This moment has been anticipated for the last 6 or so months and has produced mixed expectations from various financial institutions. The main question tonight is whether Powell & co. provide a specific date they will begin tapering and how soon that is. For example, if they simply confirm tapering will begin later this year, then this may be perceived as dovish by the market and produce a weaker greenback. On the flip side, if they announce tapering will begin next month, this would no doubt be bullish for the US dollar.
The announcement arrives at 7 pm tonight with the accompanying statement and press conference commencing at 7.30 pm and lasting for around an hour. Volatility across all asset classes can be expected tonight as this is a big announcement from the market’s perspective.
Written by Viv Savani. 8:11am, September 22nd 2021
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