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Dollar frozen ahead FOMC decision and start of high level US-China trade talks

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The US dollar appears frozen as parts of the Midwest brace for Antartic-like weather. The greenback may fall today if the Fed does sticks to the script of remaining patient and flexible.

The Fed is expected to deliver a dovish message and signal that they will be patient in raising rates. The Fed will begin their new communication strategy of having a press conference after all FOMC decisions this year. The Fed’s balance sheet reduction has been blamed for some of the selloff we saw since mid-December. The Fed initially planned to shrink the balance sheet by $2 trillion dollars, and investors will look for clues if they signal that it will end much sooner. Most economist expect the balance sheet runoff to continue for the rest of the year.  The Chairman may provide a little more clarity on the balance sheet, but don’t expect specific levels.

The US-China 90-day trade truce is coming to an end on March 1st and today’s start of the two-day meeting with high level officials will tackle key core US demands on intellectual property rights and forced technology transfers. China has already delivered proposals on narrowing the trade gap buy purchasing goods, but we may see talks fail to reach any significant agreement on the core issues. Talks could very well fall apart this week as both sides attempt to outline key stances for negotiation purposes, but the door would be open for another round of talks.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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