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FX.co ★ 28.07.2021: US Fed to keep its monetary stimulus? (S&P500, DXY, USD/CAD, BTC/USD).

28.07.2021: US Fed to keep its monetary stimulus? (S&P500, DXY, USD/CAD, BTC/USD).

Yesterday, the US stock market closed in the red, though it had been trading at historic highs for a few recent days. Ahead of the outcome of the Fed’s policy meeting, all key stock indices declined yesterday. Will US stocks incur more losses and what will happen to the US dollar after the Fed’s verdict? Find out in this video! On Wednesday, the three benchmark stock indices are trading mainly with gains in anticipation of the Fed’s statements on further monetary policy. Besides, the stock market is propped up by upbeat reports on corporate earnings. Many companies included in the S&P500 reported decent financial records today that pushed the index up. Now the index is trading at about 4,400, a bit lower than the fresh historic highs. The S&P 500 is expected to trade in the corridor of 4,380 to 4,420 until the US central bank unveils its policy decisions. The US dollar index which measures the strength of the greenback against a basket of six major currencies slipped yesterday to 92.50 points. The expected range for the index is between 92.00 and 93.00. A further trajectory depends entirely on the Fed’s rhetoric. One of the options is that the US dollar could advance across the board in confidence. This will happen if the regulator signals the hawkish shift in monetary policy. The USD/CAD pair is poised to continue its climb. Though oil prices are rising again, this does not provide the loonie with support. The currency pair is now trading higher at near 1.2580. The Canadian dollar weakened even in light of the inflation report which logged a decline in the CPI from a year ago. Analysts project the USD/CAD pair to trade in the corridor of 1.2500 to 1.2680. At present, the driving force for the pair is not Canada’s macroeconomic data but the US dollar index. In turn, in case the US dollar asserts strength today, the pair is likely to surge. Crypto investors seem to enjoy a long-awaited uptrend. How long will it last? The question is open. Bitcoin has jumped to 40,000 dollars for the last week. The digital token received a boost from the news that Amazon could accept cryptocurrency as payment on its platform until the year end. The thing is that this information is nothing but rumors which is not enough to ensure a steady bullish trend. So, once bitcoin faced resistance at 40,000, it began losing ground. The number one cryptocurrency will be able to gain the bullish momentum on conditions it breaks the level of 41,000 upwards and holds firmly above it. Otherwise, bitcoin will drop to 36,000 – 37,000 dollars. All in all, market sentiment in the US stock market in the nearest days will depend on the Fed’s verdict. Some forex analysts say the chances are high that the Fed would not shift policy whereas others predict that the central bank could decide on tapering its monetary stimulus. In case, the Fed signals tapering, the stock market will respond with a sharp downward correction. In this case, the key stock indices could tumble 2 – 2.5%. If the Fed stands pat on stimulus, stocks will have some space for further growth. Nevertheless, a large downward retracement is still looming in the near future.

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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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