The US Federal Reserve was due to begin it’s much-awaited two-day meeting this Tuesday. It is widely expected that the central bank will raise interest rates by a quarter percent.
The recent increase in inflation and the latest US job reports suggest certainty that the central bank will hike the rates this Wednesday, for the third time in 15 months.
The Fed raised the interest rate for the second time in December 2016 since the financial crisis of 2007-2009.
Stocks all around the globe pulled back as market experts and investors are making guarded moves before the announcement of the decision on Wednesday evening.
Investors are also aiming their attention at Wednesday’s Dutch elections. An unexpected outcome of the elections could result in the victory of a eurosceptic party.
The pound also fell against the dollar after the British Parliament gave its prime minister, Theresa May the force to exit from the European Union.
How does this affect you?
The Fed generally raises rates to avoid an economy from overheating and from serious inflation uptick.
As the dollar is the world’s reserve currency, any policy change or alterations to the interest rates will affect exchange rates across the globe.
The last two times the Fed increased interest rates, the dollar strengthened by up to 3 cents.
In this current market uncertainty, it is more important than ever to have a strategic approach to trading and investing.
If you need advice or wish to learn in more detail about market volatility, please contact Sean Collins, our senior currency expert.
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