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29.01.2025 10:53 AM
Markets expect no surprises at FOMC meeting. NASDAQ CFDs and Bitcoin poised to grow

Indeed, the DeepSeek case in China caught the West off guard and served as a striking example of a "cold shower" reaction in an environment where Western economies have been basking in their own achievements in artificial intelligence. However, in my view, it's too early to talk about Western AI companies losing their leadership—this sector simply won't be a monopoly anymore, which is ultimately beneficial for consumers of these technological solutions.

On Tuesday, after digesting the news from China, the stock market began an active recovery. The three benchmark US stock indices recouped most of their losses, and investors are now fully focused on the Federal Reserve's monetary policy decision. The two-day FOMC meeting concludes today, and it's worth taking a closer look at this issue.

Market expectations and the Fed's interest rate decision

Let's start with market expectations—do investors foresee any changes in monetary policy following this meeting? According to futures on federal funds rates, the market assigns a 99.5% probability that the Federal Reserve will keep interest rates unchanged within the 4.25%–4.50% range. As I mentioned earlier, the key factor won't be the decision itself but Fed Chair Jerome Powell's press conference, where markets will be looking for his outlook on further rate cuts this year.

What to expect from Powell?

I don't believe Powell will deliver any new insights to the markets. He will likely highlight the uncertainty surrounding Donald Trump's economic policies, which are already causing market fluctuations. One day, Trump threatens to impose higher import tariffs on Colombia over migration issues. The next, he backtracks after getting his way. And so the cycle continues.

Powell is also expected to reference inflation trends amid a strong labor market, where employment growth and still-high wages continue to drive consumer demand for goods and services. Additionally, he may touch on tariff policies, which, if implemented rather than merely threatened, could further drive up prices and inflation. Given these factors, Powell will likely emphasize the need to maintain a wait-and-see approach, closely monitoring economic developments before making any moves.

If the FOMC and Jerome Powell deliver no surprises regarding interest rates, market reaction to the decision is likely to be muted. This, in turn, would create favorable conditions for US stock indices to continue their recovery, while demand for cryptocurrencies could also rise. The US dollar, however, could come under pressure in such a scenario.

Daily forecast

This image is no longer relevant

This image is no longer relevant

#NDX The NASDAQ 100 CFD is recovering. A breakthrough above the 21,536.20 resistance level could push the index further toward 21,859.40.

Bitcoin Bitcoin is trading below 102,805.00. Easing market tensions could drive crypto prices higher. A break above this level may serve as a catalyst for growth toward 106,660.00.

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