USDCAD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern.
The Feds are going to release their interest rate decision very soon and economists are anticipating a potential 25bps hike which could further strengthen the position of the US dollar in the forex markets. Here is all you need to know:
Feds Inflation Meeting
When 2023 began, the Federal Reserve was intent on achieving one primary objective: bringing under control the high inflation that has been a problem for American consumers since 2021. The difficulty of that task has significantly increased over the course of the last two weeks. As a continuation of their effort to combat accelerating inflation, many financial experts anticipate that policymakers at the nation’s central bank would lift interest rates by a quarter point on Wednesday, bringing them to a level slightly over 4.75 percent.
GOLD-XAUUSD is moving in a descending channel and the market has reached the lower high area of the channel.
Before a succession of high-profile bank closures and government rescues prompted worries about both the economic outlook and financial stability, a variety of investors and economists had anticipated that the Federal Reserve would make an even more significant adjustment in terms of interest rates. The Federal Reserve made its second measure in a week to bolster the stability of the financial system on Sunday by increasing the size of a program that keeps dollar money flowing across the world.
On the Sunday before, it introduced an emergency loan program with the intention of acting as a release valve for financial institutions that are in need of more funds. When it comes to interest rate policy, which determines the pace at which the economy grows, Federal Reserve Chair Jerome H. Powell and his colleagues need to decide how to respond to the instability in the banking industry. Also, they need to move rapidly.
Feds Economic Projections
This week, in addition to announcing a decision about interest rates, officials from the Federal Reserve will publish a set of quarterly economic projections that will indicate how high they anticipate the cost of borrowing money to rise throughout the course of this year. Before the market turbulence, central bankers had signaled that they would modify that predicted peak even higher in their new estimates.
USDJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
They had anticipated that they would raise them to about 5 percent in 2023. Yet, Federal Reserve policymakers will soon be forced to decide their next course of action against the backdrop of an unstable financial sector.
Either they could try to separate their fight against inflation from the question of financial stability altogether, or they could try to strike a balance between the risks of persistent inflation and the risks of causing financial turmoil by raising interest rates more gradually and stopping earlier to avoid fueling more turbulence. In this hypothetical situation, when it came time for the Federal Reserve to determine the level at which interest rates would be set, the central bank would pay attention to problems with the banking system only to the extent that it appeared likely that those problems would slow down the actual economy.
Feds Copy ECB
This is the same strategy that the European Central Bank used the week before last when it went through with its intentions to raise interest rates by a half percent even though one of the largest banks in Europe, Credit Suisse, was caught up in the market mayhem.
EURUSD is moving in ascending channel and the market has rebounded from the higher low area of the channel.
Because of the variety of outcomes that are possible, this conference of central bankers is the most unpredictable that has occurred in recent years.
During the tenure of Mr. Powell, officials have, for the most part, provided hints as to what they intend to do with interest rates in advance of their meeting. This is done to ensure that they do not take the financial markets by surprise and cause a more significant reaction than is warranted with their policy adjustment. Yet as we start this new week, there are not a lot of certainties. The market participants were placing chances of sixty percent on a quarter-point gain and forty percent on there being no change at all.
US-Taiwan Meeting
Taiwan announced on Tuesday that President Tsai Ing-wen will travel via the United States on her way to Central America at the end of the month. However, there was no news on whether or not a meeting with House Speaker Kevin McCarthy of the United States will take place during this trip. According to statements made to the media by presidential spokesman Lin Yu-chan, Tsai will go to New York on March 29 before continuing on to Guatemala and Belize. After that, she is going to make a pit stop in California before heading back to Taiwan.
GBPUSD is moving in the Descending channel and the market has rebounded from the lower low area of the channel.
The presidential office refused to reveal any information about Tsai’s schedule in the United States when she was questioned about whether or not she will meet with McCarthy, as has been widely reported over the last several weeks. McCarthy stated to the press earlier this month that he will meet with Tsai when she is in the United States, but he did not provide a date for the meeting. In addition, he did not completely exclude the idea of making a personal journey to Taiwan in addition to their scheduled appointment there.
AUDUSD is moving in the Descending channel and the market has fallen from the lower high area of the channel
Any face-to-face encounter between McCarthy and Tsai is certain to enrage China’s governing Communist Party, which claims democratic Taiwan as its own territory despite never having held it. McCarthy and Tsai have a history of tense relations. The trip that Tsai is planning to take comes at a time when both Taiwan and the United States are stepping up their efforts to combat China’s expanding military capabilities. It also occurs at the same time as the visit to mainland China by former President of Taiwan Ma Ying-jeou, making it the first trip of its kind by a former Taiwanese leader since the end of the Chinese Civil War in 1949.
The two trips are taking place at a very awkward moment in terms of politics. The next presidential election in Taiwan is set to take place in January of the following year. Tsai does not meet the requirements to run for reelection. Concerns of a future Chinese invasion, which have lingered over Taiwan for more than seven decades, are particularly strong at the moment. These fears have been amplified by both the rising assertiveness of Chinese leader Xi Jinping and Russia’s invasion of Ukraine.
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