FXStreet (Łódź) - According to FXStreet Chief Analyst Valeria Bednarik the fate of the US dollar next week depends on the result of the Federal Reserve monetary policy meeting, the US GDP as well as the jobs data releases.

Key quotes

“As for the FOMC, the fact is that not much should be expected, as there is no press conference scheduled post meeting.”

“A statement will of course be released as usual, and market expects it to confirm QE will end following the October meeting, not a surprise anymore; attention will focus particularly in any line regarding the current assessment of the labor market, a barometer of when rates will be hiked.”

“And while labor market indicators had been for the most mixed, the main indicator, Nonfarm Payrolls, will be release after the meeting, which signals the FED will likely maintain previous meetings wording. In that case dollar can suffer a setback, on diminishing expectations of a rate hike.”

“If the wording changes however, and the FED eases its view on employment recovery anyway, dollar will likely get a boost.”

“When it comes to employment figures, unemployment rate stands at 6.1% Fed’s year-end target and an over 5 years’ low, while past month, the economy managed to add 288K new jobs.”

“For this month market expectations are of 230K new jobs added which will fit average and therefore be understood as positive.”

“The problem is still the participation rate, which measures the total number of people either employed or actively looking for work, a number the FED likes to ignore completely: the labor force participation rate for all ages stands at 62-8, the lowest since 1978.”

“Nevertheless, if the numbers results above expected, investors will likely choose to price in a sooner than expected rate hike, more over if FED statement confirms purchase programs will end upcoming spring, with dollar edging higher across the board.”

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