The Fed will hold its first FOMC meeting for 2021 on Wednesday. Based on the performance of US assets (U.S.), investors do not expect a surprise from the Central Bank, but with the surge in the stock market and the US downtrend is a sign that investors are expecting more stable policies. Coupled with the expectation that the U.S. economy will begin to recover in the second quarter.
However, it is undeniable that the economy faced some challenges in December with rising pandemic cases and the spread of new variants that forced many countries to impose sanctions. However, this does not have much impact on market expectations because the continuous distribution of vaccines makes the market more confident.
The question is, are more US dollars in a buy position or vice versa? Some analysts believe it revolves around these two things, namely Powell's views on economic prospects and policy evaluation. Last month some policymakers suggested 'tapering' in 2021 if economic recovery is sufficient.
There have been several indications given by Powell in December that the Central Bank tends to extend asset purchases. Powell also said the economy is expected to perform better in the second quarter due to vaccine adoption.
The US dollar index, which measures the greenback against the major, recorded a consolidation of 0.71% to the 90.793 exchange rate as of 11.00 p.m.
Other risky currencies such as GBP and Euro continued to show declines ahead of the FOMC meeting as markets preferred to take precautions and sell them at high levels.
