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

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.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.