The USD is on top so far. Overview for 21.09.2017

The main currency pair plummeted yesterday after the Fed’s comment and decisions; the market is pretty satisfied with the result of the meeting.

On Thursday morning, the EUR/USD pair is trading rather neutrally and trying to stabilize after yesterday’s fluctuations. The current quote for the instrument is 1.1910.

So, the key rate remained unchanged at 1.00-1.25%, but it is very likely to be increased by 25 basis points in December. In October, the regulator is going to start to decrease the amount of assets on its balance, and this is exactly what the market had been waiting for for a long time.

It looks as though the Federal Reserve has realized that the QE program, which has been going on for ages, has no longer the required effect. And as the program goes forward, there might be more negative consequences for the economy than positive effects. And that’s not only about the USA, it’s a “headache” for the entire global economy, which kind of want to move to another level, but brings all of its previous insufficiently explored “diseases” along.

From now on, after the regulator starts selling the assets on its balance (and it’s huge money, about $4.7T), the money market liquidity will be reducing slowly. It means that behavior of stocks and other assets will be more clearly and adequately dependent on fundamental factors. However, some still think that the decrease of the Fed’s balance will make the market, on top of everything else, more volatile and unpredictable.  

No one claims that the Fed’s balance will reduce quickly and it’s very unlikely to see investors leaving the market. There can’t be any serious fluctuations on the market when such global regulator as the Federal Reserve implements its monetary policy.

RoboForex Analytical Department