Investors anxious ahead of the FOMC decision
22 September 2021
Sentiment improved on Wednesday after some "positive" news from China as traders are getting ready for today's FOMC decision.
Earlier in the day, China Evergrande Group's central unit, Hengda Real Estate Group, said it would make a bond interest payment on Thursday after private negotiations with bondholders. However, Evergrande needs to pay another 83.5 million USD of interest tomorrow and 47.5 million USD of interest due next week, likely leading to bankruptcy.
Additionally, the Bank of Japan left monetary policy unchanged but sounded dovish, undermining the Yen and sending the USDJPY pair 30 pips higher.
The Bank of Japan's Haruhiko Kuroda reiterated that the central bank "will ease policy further without hesitation as needed" while speaking after the central bank monetary policy meeting.
The main event of the day will be the conclusion of the FOMC meeting. The Fed is widely expected to set the starting date for tapering at November; however, considering the recent weakness in the labor market and a sell-off in stocks, it might delay that decision. That would be a sizeable dovish surprise.
The rest of monetary policy should remain unchanged, with the central bank forecast to leave interest rates intact for a very long time.
Judging from the market behavior today, investors are hoping for a dovish surprise as stocks and precious metals are bid strongly, while the USD is seen lower against most of its major peers.