Federal Reserve Preview (JUL 2024)
Federal Open Market Committee (FOMC) Interest Rate Decision
The Federal Reserve kept US interest rates at the current threshold of 5.25% to 5.50% in June, with the update to the Summary of Economic Projections (SEP) revealing that ‘the median participant projects that the appropriate level of the federal funds rate will be 5.1 percent at the end of this year.’
US Economic Calendar – June 12, 2024
The Federal Open Market Committee (FOMC) warned that ‘the inflation data received earlier this year were higher than expected,’ with the central bank going onto say that ‘we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent.’
It seems as though the FOMC is in no rush to switch gears as the central bank pledges to ‘make our decisions meeting by meeting,’ but the fresh forecasts suggest Chairman Jerome Powell and Co. will continue to prepare US households and businesses for a less restrictive policy as ‘it will likely be appropriate to begin dialing back policy restraint at some point this year.’
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
USD/JPY Price Chart – 15 Minute
Chart Prepared by David Song, Strategist; USD/JPY on TradingView
USD/JPY rallied following the Fed decision as the central bank adjusted its forecast from the March meeting where ‘the median participant projects that the appropriate level of the federal funds rate will be 4.6 percent at the end of this year.’ However, USD/JPY struggled to retrace the decline from earlier in the session as the exchange rate close the day at 156.73.
Looking ahead, the FOMC is expected to retain the current policy in July, and more of the same from the committee may generate a similar reaction to the June meeting as market participants push out bets for a Fed rate-cut.
However, the FOMC may further adjust the forward guidance for monetary policy as Fed officials project lower US interest rates in 2024, and the US Dollar may face headwinds should the central bank show a greater willingness to deliver a rate-cut at its next meeting in September.
Additional Market Outlooks
AUD/USD Forecast: RSI Recovers from Oversold Zone
US Dollar Forecast: GBP/USD Tests Former Resistance Zone for Support
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2024