The FOMC members will gather today for a two-day meeting. It will be the most important event this week, since Powell will chair the meeting for the first time. Gold investors want to get to know him better as the uncertainty makes them a bit nervous.
A reconstituted Federal Reserve under new leadership will face tough challenges in the year ahead. Monetary normalization is well underway, with the Federal Open Market Committee (FOMC) having raised the Federal funds rate five times since it left the zero lower bound two years ago and started shrinking the bloated balance sheet built up through three rounds of bond buying.
The goal in trading is to get ahead of the herd. It’s best to anticipate what’s going to happen in the next five to 60 days and focus on major events. Is the top analyst going to upgrade a stock before earnings? Will global macro traders try to position hawkish or dovish around the next FOMC statement? Will the next crop report show more supply or demand? These are the questions; the answers to which will move markets.
The British pound’s appreciation against the dollar was short lived during Tuesday’s trading session as investors evaluated the likely impact of UK inflation climbing to its highest level in almost six years.