The FOMC statement yesterday announced as expected that rates would not yet be hiked but that tapering to QE would begin this month and last until July 2022, at a pace of a $15 million reduction each month. This is a major policy shift of monetary policy in a less dovish/accommodative direction but has limited market impact as it was widely expected. The FOMC also used language suggesting the current historically high inflation rate is expected to be somewhat less transitory compared to their previous assessments. US stocks continued to rise to new all-time high prices following the statement. It is likely we will see higher prices in the NASDAQ 100 and S&P 500 Indices over the coming days.
The Forex market remained quiet following the FOMC statement release, with the USD quietly bullish but not moving much. The USD is the strongest currency right now, while the CAD, EUR, and AUD are the weakest. Although these flows are very short-term, there is a long-term strength in the USD that is likely to continue.
The ADP non-farm payrolls forecast came in higher than expected yesterday, with a prediction that 571k new jobs will have been created, higher than the previous consensus of 400k.
Today will see the release of the Bank of England’s monthly policy statement, so there may be volatility in the British pound later.
Last week saw the second consecutive global weekly rise in new confirmed coronavirus cases after two months in which cases fell steadily.
It is estimated that 49.7% of the world’s population has received at least one dose of a coronavirus vaccination.
Total confirmed new coronavirus cases worldwide stand at over 248.8 million with an average case fatality rate of 2.02%.
The rate of new coronavirus infections appears to now be increasing most quickly in Austria, Bulgaria, Chile, Croatia, the Czech Republic, Denmark, Egypt, Estonia, Germany, Greece, Hungary, Iceland, Jordan, South Korea, Laos, Lithuania, Montenegro, Netherlands, New Zealand, Norway, Poland, Russia, Singapore, Slovakia, Slovenia, Switzerland, Vietnam, and the Ukraine.