The dollar is edging higher during early Wednesday trading, as investors await the conclusion of the Fed’s meeting later today. There are two potential scenarios that can emerge when Jerome Powell announces the central bank’s latest policy statement. One features mentions of inflationary risks and further hints on tapering, which will offer further support to the greenback. On the other hand, it is also possible that a special emphasis over concerns related to the state of the job market, the end of the evictions moratorium and threat posed by the Delta variant ends up tilting the tone of the address towards a more dovish stance; a scenario likely to lead to dollar losses.
Oil is gaining during the early part of Wednesday’s session, supported by a draw in American crude stocks. This reduction feeds into the narrative of supply being insufficient to meet demand, supporting oil prices as a result. Despite the threat posed by the spreading of the Delta variant, the IMF maintained its growth forecast of 6% for the global economy, a scenario that projects the continuation of high demand for oil and may lead to further price gains.
European shares were mixed on Wednesday, continuing the Asian trend as global uncertainty linger everywhere. Investors were torn between the economic recovery, tightening regulations in China and the prospect of the Fed withdrawing support driving investors towards safe havens and diversification solutions, hence the recent appetite for bond and crypto markets. Even the better-than-estimated earnings season isn’t providing the bullish support some investors may have been waiting for. Some traders seem to see strong corporate results as an occasion to take some profit in an uncertain macro context, which partially explains the mixed response from investors towards yesterday’s solid reports by Apple and Alphabet. Meanwhile today, all eyes will be on the FOMC statement where investors are desperately seeking more clues on how rising inflation will impact the Fed’s loose policy in the near-term.
Technically speaking, one of Europe’s largest movers today comes from Milan as the FTSE-MIB Index is still trading above 25,000pts following a successful pull-back from 24,960pts.
Pierre Veyret– Technical analyst, ActivTrades
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Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.