News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Further your forex knowledge and gain insights from our expert analysts on AUD with our free guide, available today: https://www.dailyfx.com/free-trading-guides?ref-author=social#forecastschoices=AUD?QPID=30472&CHID=9 https://t.co/LHJi7CNFmM
  • $EURUSD https://t.co/KZyXX6p2oI
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here: https://t.co/MZtBh8pYG3 https://t.co/1zNf5dpDjU
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/z8z6BNudn5
  • #PELOSI SAYS WE ARE GOING TO PASS THE INFRASTRUCTURE BILL THIS WEEK PELOSI SAYS SHE WILL NEVER BRING TO THE HOUSE FLOOR A BILL THAT DOESN'T HAVE THE VOTES TO PASS $USD $SPX $XAUUSD
  • Short-term uncertainties to keep the pressure on equity markets. Get your weekly equities forecast from @JMcQueenFX here: https://t.co/JLMDPZKvN8 https://t.co/YbdJnwoqj1
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/hqW38VawJl
  • - Unreal atmosphere - Shame about the result, but no complaints - Usyk masterclass - Heavyweight division blown wide open https://t.co/BKCLJTDk9h
  • The USD could still rally a bit from here, but has resistance not far ahead that it will need to overcome if it is to extend to a larger degree. Get your weekly $USD technical forecast from @PaulRobinsonFX here: https://t.co/n0CVWWOJDe https://t.co/0uLjsQ2gwM
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/nfiFAlyYXv
Dow Jones Forecast: History Suggests FOMC Policy May Buoy Index

Dow Jones Forecast: History Suggests FOMC Policy May Buoy Index

Peter Hanks, Strategist

Dow Jones Forecast Talking Points:

  • The Dow Jones looks to dovish monetary policy for trend continuation purposes
  • The Fed’s accommodative plan may outweigh concerns over domestic growth
  • For a deeper look into the equity space, sign up for my weekly webinar - Stock Market Catalysts in the Week Ahead

Dow Jones Forecast: History Suggests FOMC Policy May Buoy Index

While Wednesday’s FOMC meeting fell largely within market expectations, March’s Summary of Economic Projections (SEP) offered a bleaker outlook for the US economy. With the Fed’s policy outlook solidified, the Dow Jones now faces conflicting fundamental themes. However, history may suggest lower GDP forecasts are not necessarily bad news for the Dow Jones.

Dow Jones Price Chart: Daily Time Frame (June 2018 – March 2019) (Chart 1)

dow jones price chart after fomc meetings

Since last year’s March FOMC meeting, all five meetings with fresh updates on forecasts saw a change in the GDP outlook for the US economy. It is important to note that each quarterly event in 2018 also accompanied a 25-basis point increase to the interest rate range, a fundamentally bearish development for equities.

Learn the differences between the Dow Jones and the S&P 500

That said, three of the five GDP forecast updates were upward revisions. Each subsequently saw the Dow Jones trade lower in the week/s that followed as the case for future hikes was bolstered alongside an immediate rate increase. The March, June and September FOMC meetings saw an average decline of 1.81% in the following five trading days. In the following three weeks, each event preceded an average decline of 3.27%.

View our Economic Calendar for big events scheduled in the week ahead.

In comparison, lower adjustments to the US GDP horizon were followed by more mixed performance. December’s meeting - the last to be accompanied with an interest rate hike – declined 3.05% in the subsequent five trading days and rose 0.6% in the following three weeks. It is worth noting the extreme volatility in the Dow Jones around December’s FOMC meeting, exacerbated by holiday conditions.

Dow Jones Price Chart: 1 - Hour Time Frame (November 2018 – March 2019) (Chart 2)

dow jones price chart

The decision to hike rates at December’s meeting followed a dovish shift from Fed Chairman Powell in late November and the potential to pause rate hikes in 2019, which markets have now realized fully. In its most recent insights, the group’s median outlook calls for changes in the interest rate through the year while the year's GDP forecast was lowered from 2.3 to 2.1 percent. Given the past performance of the Dow Jones following downward GDP revisions and their impact on the case for future hikes, the days ahead may see the Average continue Thursday’s rally as the impacts of dovish monetary policy overwhelm concerns of lower domestic growth.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: S&P 500 Outlook: Regulators Set Sights on Facebook and Google

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES