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Will the Fed’s Meeting Minutes Cause Waves to the Markets?
16.08.2022

The US Dollar Index slightly declined lower than the opening price this morning but generally remains steady so far, as the currency attempts to regain the lost ground.

Economists and banks such as Goldman Sachs and JP Morgan continue to release their assessments of the US Economy and predictions for the next year. According to most economists, the US economy has shown signs of stalling and the level of inflation is likely to remain high if commodity prices do not continue to decline. However, the market will want to hear the opinion of the Federal Reserve which will be released tomorrow afternoon following the Federal Open Market Committee’s (FOMC) Minutes.

After the Meeting Minutes are released, other members of the FOMC, such as Governor Bowmen and Fed President Mrs George, are due to release statements. The level of volatility on the currency will depend largely on the comments made by both members. For example, if an unexpected stance or a very bullish view is taken, then volatility may be witnessed.

Markets are also largely looking at the commodity market as economists believe that demand will rise in the Asian markets, specifically in China. At the same time, yesterday both the US and China released poor data which caused yesterday’s 4.36% price decline. So, we have seen the price of oil and commodities slump recently but equity markets have generally held their value so far.

USD/JPY

The price of the USD/JPY is showing mixed price movement and a lack of direction as the market falls into a “tug of war” scenario due to opposing influencing factors. Currently, the price is hovering at the 2-3 month average and is also following the volume-weighted average which may refrain traders from placing large trades until a decisive movement is witnessed. Potentially, this may be seen after the Fed’s Meeting Minutes tomorrow evening.

USOJPY - 16.08.2022.png USD/JPY 6-Hour price chart on August 16th.

Members of the FOMC have recently noted that inflation remains high, and the recent slowdown in the indicator may be due to temporary factors. Therefore, in general, there are no reasons for the Fed to pause the tightening of the Monetary Policy in the country yet. The attention of experts this week will be riveted to the publication of the upcoming Meeting Minutes of the US Federal Reserve Open Market Committee, which is due on Wednesday. The document may explain the reasons for the latest rate increase and hint at further actions by the regulator.

The Japanese Yen Index, which confirms the value of the Yen against 6 of its many competitors, has slightly increased over the past 2 days as the economy appears to perform better than expected. However, most economists believe that the Yen remains relatively bearish in the longer term, especially as the country’s Gross Domestic Product (GDP) figure remains lower than expected.

Bitcoin

The price of Bitcoin continues to remain within a retracement after the significant price increases which were witnessed earlier this month. The volatility level witnessed during this morning’s Asian Session only measured 0.40%. Again, traders are potentially waiting for confirmation from the Fed on the Monetary Policy which has been one of the strongest drivers over the past 5-6 months.

BTCUSD - 16.08.2022.png Bitcoin 4-Hour price chart on August 16th.

Many investors continue to remain uncertain as the cryptocurrency market has experienced significant declines and been unable to find lasting momentum when bullish price movement is experienced.

Analysts from JPMorgan Chase are one of the latest to release their predictions for Bitcoin and the cryptocurrency market in general. They advise that the negative effect of the collapse of Terra has lost most of its importance and influence. According to them, the cryptocurrency market has bottomed out and can now resume growth.

However, the opposite opinion is shared by Galaxy Digital’s Michael Novogratz who continues to advise that the tightening of monetary policy in the US will continue to put pressure on digital assets, and the BTC rate is unlikely to exceed 30K by the end of this year. Previously, he had advised that the asset will remain in the range of $20,000 – $30,000 and will not likely be able to maintain its direction outside of this price range.

Key Takeaways:

  • USD attempts to regain some of its losses.
  • The Federal Open Market Committee’s (FOMC) Minutes are due tomorrow.
  • The price of the USD/JPY is showing mixed price movement.
  • The Yen gained in on its competitors over the past 2 days.
  • The cryptocurrency market remains uncertain despite its recent bullish advances.
  • The Monetary Policy decisions in the US continue to put pressure on the markets.
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