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It’s the second Federal Open Market Committee day. The meeting will include a summary of the Fed’s economic projections for the last quarter of the year, a press conference from the Fed Chair Jerome Powell, and an announcement of its monetary policy for months to come. Westpac anticipates that the central bank will keep its interest rates around 0.25%. In the meantime, greenback weakness is expected to continue near-term alongside the falling dollar no thanks to an expected fall on core retail sales for the month of August. On a monthly basis, the figure is expected to go down from 1.9% to 0.9%. Monthly retail sales could also go down from 1.2% to 1.0% in the same month. These factors are projected to push the greenback down against its Hungarian counterpart despite recent economic negativity in the country, including a plummet of 21% in construction output seen last July, a deeper contraction than the 15.7% seen prior.
Mexico recently assured the World Health Organization that 25 million would receive vaccines against the coronavirus to ensure universal and free access to those who need it. Earlier this week, the central bank of Mexico said that it extended measures to add liquidity to its financial system. The liquidity facilities announced in April will also be extended until the end of February of next year. Typically, these would be bad news for Mexico, but the peso is in luck – the Federal Open Market Committee will submit its projections for how the United States will manage to overcome the economic detriment of the coronavirus pandemic, as well as its forecasts for any changes in interest rates within the next three years. The agency will also announce its expectations for the GDP contraction, year-end. Although the greenback is projected to meet the bears amid uncertainties, the outcome of the meeting will determine its track longer-term.
Even as risk appetite raises currencies opposite of the greenback, it looks like the safest currency is projected to boost against the oil-sensitive Norwegian krone. Crude oil inventories are projected to report a slump for the week, which could come in from 2.023 million to 1.271 million later today and help boost oil prices specifically in the United States. Oil prices are projected to assist the rise of its currency, and could even assist its long-term increase. Meanwhile, as one of the world’s largest producers of oil, Norway’s economy would be in grave danger: further pandemic lockdowns will send oil demand plummeting for the rest of the year. If Norway manages to shift its investments from crude to hydrogen, it could recover, but its near-term fate is sealed, unless the FOMC reports on inflation and interest rate projections to 2023 will leave devastating news that could trigger further damage towards the greenback.
Poland’s Monetary Policy Council left the country’s benchmark interest rates at 0.10 percent. This will be part of the nation’s confidence that it will meet its inflation target by the end of the year, which it had expected to increase by 3 percent on a yearly basis. Although, prices of goods and services are projected to fall by 0.1 percent on a monthly basis. Domestic statistics offices reported an increase on retail sales in July by 3 percent against 2019, and up by 6.5 percent in comparison to June. Furthermore, the National Bank of Poland confirmed that it expects further growth in its economic situation and is looking forward to easing its monetary policy in the upcoming months. However, its increase could be limited, since there are notable uncertainties brought by the pandemic. For now, the economic improvements reported will be the driving force of the zloty’s increase against the US dollar near-term unless the FOMC reports positivity for the US economy.