Market analysts are increasingly warning investors of trades that are seen as risky this week with uncertainty ahead of the FOMC meeting taking center stage.
The US dollar that weakened at the beginning of the week was seen to recover on Tuesday yesterday supported by the reading of the United States (US) retail sales data for August which was relatively better than forecast.
Even so, the strengthening situation of the US dollar is likely to be only temporary due to the CME FedWatch indicator still showing a percentage that is more in favor of aggressive policy easing by the Federal Reserve (Fed) with 65% expecting an interest rate cut of 50 basis points, while 35% for 25 basic points.
Although speculation regarding the number of basis points that will be lowered remains a question, the majority of the market has placed confidence that the Fed will implement the first interest rate cut since March 2020 at this meeting.
The FOMC interest rate decision will be announced early Thursday morning, at 2am local time.
Then will follow the policy meeting of the central bank of England (BOE) on the same day at 7 pm, will affect the movement of the Pound currency.
But before that, the focus will be on the release of UK inflation data in the European session today (Wednesday).
At the end of the week, the Bank of Japan (BOJ) will also hold its latest policy meeting with the expectation that interest rates will still be kept unchanged as before.
In yesterday's New York session, also published alongside US retail sales data was Canadian inflation data which showed a drop to 2% for its annual reading, the lowest since February 2021.
This situation could prompt expectations for the Bank of Canada to extend their policy easing measures after interest rates were lowered 3 times in a row.
