FOMC preview – by- Michael Oyebamiji
January 27, 2016The first Federal open market committee meeting for 2016 is scheduled for today. Market is expecting interest rate to remain unchanged and there won’t be any press conference this time around. Therefore, trader will have to listen and read through the statement release carefully in other to forecast market direction for the next couple of trading days
FOMC is likely to give more hope to a potential rate hike in the next meeting sometimes in March even though market is pricing in for two rate hikes in 2016. Since the first rate hike in December, we have seen some great improvement in some sectors of the US economy notable the labour market. December NFP beat market expectations to print at 292,000 jobs. This shows the labour market is gradually at full employment. Inflation figures remain at the lows and consumer confidence shows some improvement at 98.1%, services pmi is still lagging behind and some other economic indicators.
FOMC is likely to put more emphasis on falling oil prices which has dropped to the lowest level in more than a decade and this is one major factor which might be weighing down on inflation. Chinese market slowdown is another factor which the FOMC is likely to put more emphasis on.
But overall, FOMC is likely to shed more lights on the possibility of March interest rate hike because of some improvement in the economy and more economic data are expected before the next meeting, which is likely to be a core factor.
This means USD might still be the currency to keep an eye on as we might see more upside on the back of rate hike expectation. A breakout on the DXY above 100 might a good news to USD bulls.
