FOMC MinutesSource: GWG
The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee’s policy-setting meeting held about two weeks earlier. It provides the Fed stance for the economy and described the formation of the monetary policy that they will follow, so currency traders carefully examine the outcome of such report for the prediction of future interest rate decisions that will be taken.
The Fed acknowledge that inflation is still increasing all the way up and this wont lead to prosperity and to real economic growth, however the bad thing is that Fed does not planning to stop purchasing the treasury debt and mortgage-backed securities and aim to keep the interest rates near zero until mid-March 2022. This may lead to a hyperinflate market in combination with more money printed.
Durable Goods Orders (Nov)Source: GWG
Consumer spending in durable goods reached 12% and represents around 25% of the whole inflation in US for the last 12 months. These are goods that planned to last for more than three years and consist of motor vehicles and appliances. The US Census Bureau will release the cost of durable goods orders received by manufacturers. In other words this report shows the growth of the US production which is highly affected by inflation. During the recent crisis there was a strong demand for durable goods within US due to increase in savings caused by fiscal stimulus policies along with the reduction in spending on services and that led inflation to significantly rose. That is one reason of high inflation rate in combination with labor shortages.
The rate of the latest report was at 0.5%, which showed no change at all in durable goods orders, whereas now it is forecasted at 0.6%. Higher than expected will be positive for US dollar.
Gross Domestic Product Annualized(Q3)Source: GWG
Gross Domestic Product (GDP) measures the yearly change what direction the inflation takes within a country based on products and services. It is very significant economic indicator which provides how efficient is the economy and gives an indication for the near future. A higher than forecasted rate should be positive for Pound.
The previous rate of GDP for third quarter was forecasted to 2a decrease from 5.5% to 1.5% and the actual rate was 1.3% even lower and that caused the pound to drop against its major pairs. The forecasted rate for Dec 22 ranges at 1.3% which is equal with the latest rate.
US Fed Interest Rate DecisionSource: GWG
Increase in interest rate set by country’s Central Bank indicates that the economy grows, and inflations increases otherwise the opposite. Central Banks need to achieve a well-balanced economy. For instance if rates are low the cost of borrowing is low, however if rates are in a high level then cost of borrowing increases thus making credit and investment more expensive and this aim to slowdown an overheated economy which later affects inflation to increase. As a result when central Bank lowers the rates, borrowing cost is less and that give incentives for further spending.
If inflation keeps rising then Fed will definitely increase the rates, which is more likely to happen sooner than anticipated as inflation still increases and this leading to hyperinflation. Noteworthy inflation is increasing as its highest pace in more than thirty years. Many investors are expecting that Fed will raise interest rates by three times within 2022.
Fed’s initial target was to reach 2% inflation rate however the current rate slightly surpassed 6% which is highly a significant level. Having that said it is a mandatory that Fed should raise interest rates which is currently at 0.25% and there aren’t prediction what would be the actual rates upon Fed’s announcement.
Higher rate than expected will be bullish for dollar hence the most traded pair EUR/USD will decline as EUR will depreciated against it otherwise Euro will rise.
US Nonfarm PayrollsSource: GWG
Previous report was greater than expected with 106k more new jobs than initially forecasted mainly due to companies earnings which increased by 0.4% in average and. That increase underpin the annual wages growth to reach 5% as inflation is running towards the sky as well.
The forecast for the upcoming NFP ranges at 563k and a higher-than-expected reading should be taken as positive/bullish for the USD.
As long as new jobs created this may lead the Fed to raise interest rates to balance the economy and that is something Fed is more likely to do taking into consideration that inflation still going up.