Fed signals a reversal in the Dollar

☝🏻 Yesterday’s Fed meeting was special, as it is the first Fed meeting under the new President Biden.

The Fed left the interest rate unchanged at 0%-0.25% after yesterday’s meeting and the vote on the rate was unanimous — there is absolutely nothing surprising, since the interest rate will change only after inflation goes beyond the 2% interest rate level and lasts there for some time.

In general, the Fed’s statement and Powell’s words at the press conference sounded the same, saying that we see a lot of risk and this risk is so risky that the risk is not a risk, but in addition to 0 rates, we continue to buy $120 billion worth of assets every month. The point of the risk statements is to make sure that investors are confident that asset purchases and 0-interest rates will continue to stimulate the economy further, but in fact, these statements are the same as if I were advised to take a pill for a headache after the headache has already passed.

But we are interested in when the Fed as a whole plans to slow down the stimulus measures? So how is this supposed to change the game. And then we finally got the signal:

The Fed announced that it will no longer offer regular repo operations for one month after February 9 — given that no more operations have been performed on one-month repos since June, this is a serious signal that there is enough liquidity in the market. Moreover, since there have been no REPO transactions since June, this indicates that there is enough liquidity in the dynamics.

I believe that the slowdown in stimulating the US economy is gradually beginning, but this is not yet a curtailment of incentives, since even with the closure of one-month repos, the financial system is full of liquidity and there is still room for it to take on.
☝🏻 Therefore, the probability that the US Dollar Index has found support now is much higher than the probability that the US Dollar Index will continue to decline.

The slowdown in incentives will first of all begin to reduce investors ‘ appetite for risk, according to my expectations, a strong controlled correction in the markets should begin in the spring against the background of the dollar’s growth, if there are no black swans, as a wave of defaults is approaching. (when I talk about a drop in risk appetite, the crypt is the most relevant)