Focus on the U.S. FOMC: Powell’s Press Conference and Rate Cut Outlook in Spotlight

Focus on the U.S. FOMC: Powell’s Press Conference and Rate Cut Outlook in Spotlight

Market’s Key Event

Today’s highlight is the final U.S. Federal Open Market Committee (FOMC) meeting of the year. The market has priced in a 25-basis-point rate cut with a probability of approximately 95.4% (CME FedWatch). While the immediate reaction to the outcome is expected to be limited, there is potential for short-term position adjustments. Attention will be on Fed Chair Powell's press conference and the rate projections by FOMC members.

Key Points of Interest:

• Whether a cautious approach to the pace of future rate cuts will be signaled amidst stabilizing inflation.
• Any changes to FOMC members’ terminal rate projections.

Depending on the details, a resurgence of dollar buying could occur.

Focus on UK Inflation Data Before FOMC

UK Inflation Data (November):

• Consumer Price Index (CPI) YoY: Forecast +2.6% (previous: +2.3%).
• Core CPI YoY: Forecast +3.6% (previous: +3.3%).
• Services Inflation YoY: Forecast +5.1% (previous: +5.0%).

If these figures exceed expectations, persistent inflation could drive further pound buying. However, with the Bank of England’s Monetary Policy Committee (MPC) expected to keep rates unchanged in tomorrow’s meeting, the reaction may be short-lived.

Other Economic Indicators

• Eurozone Final CPI (November): Expected to have a limited market impact.
• U.S. Current Account Balance (Q3): Signs of narrowing trade deficits could support dollar buying.
• U.S. Housing Data (November): Focus on housing starts and building permits.

Bitcoin Trading Strategy

Bitcoin’s movements are not directly tied to the dollar, allowing for trades relatively unaffected by the FOMC decision. If the uptrend continues, the year-end high is projected at $120,000.

Speeches and Market Highlights

• ECB Officials’ Speeches: Müller (Governor), Lane (Chief Economist), Nagel (Bundesbank President).
• German Monthly Report: Insights into the German economy.
• U.S. Weekly Crude Oil Inventory Report.

Summary

Today’s primary focus is on the FOMC meeting. The dollar market is displaying nervous movements ahead of the decision, but there are ample opportunities to explore trades in the pound and bitcoin. Stay vigilant in assessing the market's post-FOMC reaction and approach trading decisions with a calm and strategic mindset.