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The Federal Reserve (Fed) is unlikely to rock the boat in the post-election decision and opt for a cautiously optimistic tone that would keep markets and the dollar stable. If Powell expresses concerns, it could boost the dollar, sink stocks and lower expectations for the jobs report – yet the chances are slim, FXStreet’s Analyst Yohay Elam reports.

See – Federal Reserve Preview: Forecast from nine major banks

Key quotes

“The Fed releases its rate decision on Thursday, a day after its usual timing and is set to leave its interest rate and bond-buying scheme unchanged. The Fed is committed to leaving borrowing costs at low levels through 2022 at a minimum and clarified that negative rates are not on the table. Will the Fed increase its bond-buying scheme? That option is always open, but imminent action is unlikely.”

“Jerome Powell, Chairman of the Federal Reserve, has been a vocal supporter of approving additional fiscal stimulus. Will Powell push newly-elected officials to act now? On the one hand, recent economic statistics have been encouraging and the Fed would not like to sound anxious. A plea for more stimulus would cause some to think the Fed is out of ammunition and helpless, perhaps triggering a downfall in markets. On the other hand, the bank is also watching the increase in COVID-19 cases, hospitalizations, and mortalities – not only in Europe but also in the US. That clouds the economic outlook for the next months.”

“The Fed does not release new forecasts in this November meeting, but the statement and Powell’s tone at the press conference could make a difference. The Fed Chair will likely see a glass half full – cautious optimism – that would keep markets happy while stressing that more certainty is needed. In case Powell paints a gloomy picture, stocks could stumble and the safe-haven dollar would have room to rise. In addition, it could serve as a warning sign ahead of Friday’s Nonfarm Payrolls report due out on Friday.”