FOMC announcement is the main event on Wednesday - Danske Bank

FXStreet reports that analysts at Danske Bank outlined key events for Wednesday and also offered a brief preview of the latest FOMC policy decision.

“Apart from headlines regarding the spreading of the coronavirus, the main event today is the Federal Reserve's announcement of its monetary policy decision at 20:00 CET. We expect the Fed to keep its target range unchanged at 1.50-1.75% without making any major changes to the statement.“

“It is too early for the Fed to react to the recent sell-off. During the Q&A session at the press conference starting 20:30 CET, Powell is likely to be asked about his views on the recent development but we expect him to state that it is one of the risks the Fed is monitoring. In other words, the Fed is probably not going to strike a dovish tone given the labour market continues to tighten and private consumption growth remains solid.”

“That said, we may see a small 5bp hike of the interest rate on excess reserves (~60% priced in by markets), as the effective Fed funds rate is no longer trading above the IOER rate, which the Fed prefers.”

“At 18:00 CET the EU Parliament will vote on the Withdrawal Agreement. We expect the ratification to be a smooth sailing, before the UK officially leaves the EU on 31 January.”