Powell likely to hold rates at March Fed meeting
Fed Powell likely to hold rates in March
Interest rate cut path for 2024
Attention is now turning to Powell's guidance for the remainder of 2024, with traders especially keen on deciphering potential rate cuts. Current market speculation from CME futures prices estimates a 7% probability for a cut in May, and a 52% chance by June. These probabilities reflect the market's analysis of economic indicators, and have declined in recent weeks with the release of strong US inflation measures like CPI and PPI.
Fed dot plot revision coming
The March FOMC meeting will also provide a revision of the Federal Reserve's dot plot from December 2023. This document offers a forecast of interest rate expectations from FOMC members, serving as a crucial indicator of the central bank's monetary policy outlook over the coming years. Any adjustments to these projections could signal a shift in the Federal Reserve's economic expectations, directly influencing investors' and traders' strategies across a range of financial markets.
Futures traders price in 3 rate cuts
Market dynamics, as reflected by Fed Funds futures (CME), suggest a consensus towards approximately 75 basis points in rate cuts by the end of 2024. This anticipation of a dovish shift in policy by the Federal Reserve underscores the market's current sentiment and its expectations for a softer economic stance, potentially aimed at stimulating economic activity. At the start of 2024, predictions centered closer to 100-125 bps of cuts.
US dollar positively correlated to rates
The relationship between Federal Reserve interest rate decisions and the US dollar value is intricate, often seeing the dollar's strength fluctuate in line with policy changes. Predictions of interest rate cuts typically put downward pressure on the USD, making it less attractive to yield-seeking investors. Conversely, maintaining or increasing rates could fortify the dollar by offering higher returns. This correlation is a key consideration for forex traders, impacting everything from currency exchange strategies to international trade dynamics.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
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