Forex Preview: Dollar Eases As Focus Shifts To Fed Meeting

1. Dollar Eases As Focus Shifts To Fed Meeting
The USD finished last week on a weaker stand after President Trump reached a deal to at least reopen Federal government services until mid of February. If a new deal can’t be reached on the border wall, we could be looking at another shutdown next month. On Monday morning the dollar eased versus most of its peers on as investors turned their attention to this week’s Federal Reserve policy meeting, with traders wagering policymakers will signal a pause in their tightening cycle. The Federal Open Market Committee meets between Jan 29-30, and Chairman Jerome Powell is widely expected to acknowledge growing risks to the U.S. economy as global momentum weakens.*

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2. GBP/USD Deflates From Last Week’s Tops
The cable gained 2.5 percent last week after a report in the Sun newspaper that Northern Ireland’s Democratic Unionist Party had privately decided to offer conditional backing for British Prime Minister Theresa May’s Brexit deal this week. However, Ireland’s Deputy Prime Minister Simon Coveney said on Sunday the backstop was already a compromise drawn up to meet May’s negotiating red lines, and the EU and Ireland were united in the view it “was not going to change”. The news caused the GBP/USD to dip on Monday morning, to last trade at 0.25% lower at $1.3169. It is also important to note that investors are anxiously awaiting news from high-level U.S.-China trade talks on Tuesday and Wednesday to see if the world’s largest economies can reach a compromise that will end their trade war.**

3. Gold Firm At 7-month High
Gold prices held steady on Monday, at a seven-month peak scaled in previous session, on hopes the U.S. Federal Reserve will keep interest rates unchanged during its two-day policy meeting later in the week. Spot gold (XAU/USD) was firm at $1,300.52 per ounce by 9:00 GMT. It is important to note that the Federal Reserve is expected to keep rates on hold this Wednesday, while a weaker than expected NFP report this Friday could push the dollar lower and benefit gold prices***

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*Source: FXStreet Jan 28, 2019 2:48 AM ET
**Source: Forbes Jan 28, 2019 3:53 AM ET
***Source: CNBC Jan 28, 2019 03:07 AM ET