The most important conference of central banks has already begun on Thursday, but the main event will take place today - a speech by the head of the Fed, Jerome Powell. Investors around the world expect the Fed to announce that it will roll back its monetary stimulus program for the US economy.
There are quite serious reasons to believe that inflation will not be temporary and the markets expect to hear from the Fed plans about the inevitably impending inflation growth.
Signals to stop the printing press have already appeared this year and have raised the dollar. But recently, Dallas Fed President Robert Kaplan, one of the main supporters of the stimulus cut, hinted that he would change his mind if the pandemic continues to slow economic growth.
It should be noted that against the background of seasonal low market activity, investors do not expect loud statements, since US Federal Reserve Chairman Jerome Powell has little reason to rock the boat during such a period.
On the other hand, Treasury options are approaching expiration on Friday, which could increase volatility in the Treasury market.
Some experts believe that one should not expect clear signals from Powell and most likely the results of the conference will leave uncertainty about monetary policy.
Nevertheless, while the market remains calm, one can expect sharp movements against the background of news, one of the options may be just the results of the conference in Jackson Hole. At such moments, traders should be careful, as volatility can increase dramatically.
Probably the result of the conference will allow a new trend to start for the next few quarters and it is worth waiting for the right moment to enter the position.
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