Dollar slips ahead of FOMC decision, stocks cautious

Dollar slips ahead of FOMC decision, stocks cautious
On Wednesday, the greenback declined, heading into the FOMC decision, but the EURUSD pair remained below the 1.13 level.
Data released earlier Wednesday showed that China's industrial production grew faster than expected in November. Still, growth in retail sales slowed as fresh Covid-19 outbreaks led to tighter restrictive measures in the country.

Both AUDUSD and NZDUSD pairs surged after testing intense technical levels and receiving support from Chinese data.

Later in the session, the US retail sales for November are due, expected to decline notably from October's levels. Additionally, December's New York Empire State Manufacturing Index is anticipated to decrease to 25 from 30.9 in November.

USDCAD traders will pay attention to the Canadian CPI numbers released simultaneously. The yearly inflation is expected to stay at 4.7%, while the core CPI is seen sliding to 3.6% from 3.8%. Canada could be the first G7 country where the official inflation might have peaked. 

Precious metals remained under pressure, with silver still looking heavy, despite oversold conditions. The retest of October lows at 21.50 USD seems likely. Gold fell below 1,770 USD.

Equities declined notably yesterday as raising rates should be negative for most of the companies. However, indices still remain near their all-time highs. 

Investors are bracing for tonight's FOMC decision, where the Fed is expected to speed up the tapering process, and it also should sound hawkish, considering the ongoing surge in inflation. 

The market forecasts three rate hikes in 2022, with the first likely delivered in May or June. Volatility will undoubtedly be very elevated after the decision. Stakes are high, and chances are the Fed will disappoint with a dovish statement. In that case, we could see a rally in metals, equities, and bonds. On the other hand, stocks, metals, and bonds might be sold if the Fed stays hawkish. 
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