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Decoding the Structure of the Federal Reserve System 🏦 If you've ever wondered how the U.S. monetary system functions and who runs the show, keep reading. In this article, we will break down the structure of the Federal Reserve System and help you understand how it operates. 🏦 The Federal Reserve System, often referred to as the Fed, is the central banking system of the United States. It was created in 1913 by the Federal Reserve Act and is an independent entity within the government. The Fed has a three-part structure, including the Board of Governors, the Federal Reserve Banks, and the Federal Open Market Committee (FOMC). 1️⃣ Board of Governors: The Board of Governors is the governing body of the Federal Reserve System. It consists of seven members appointed by the President and confirmed by the Senate for 14-year non-renewable terms. One person is designated by the President as Chair and another as Vice-Chair. The Board's main function is to set monetary policy, supervise and regulate banking institutions, and maintain the stability of the financial system. 2️⃣Federal Reserve Banks: There are 12 Federal Reserve Banks located throughout the United States. Each Federal Reserve Bank serves a specific geographic district and is responsible for carrying out the policies set forth by the Board of Governors. The Federal Reserve Banks are overseen by a board of nine directors, six of whom are appointed by banks in the district, and three by the Board of Governors. In addition to overseeing the banking system, the Federal Reserve Banks also provide services to financial institutions and the U.S. Treasury. These services include processing and clearing checks, storing currency, and distributing new currency. 3️⃣Federal Open Market Committee: The FOMC is the most powerful body within the Federal Reserve System. It is responsible for setting monetary policy, specifically the target for the federal funds rate, which is the interest rate that banks charge each other for overnight loans. The FOMC is made up of the seven members of the Board of Governors and five of the 12 Federal Reserve Bank presidents. The FOMC meets eight times a year to analyze economic data and determine appropriate policy decisions. Their decisions impact not only the banking system but also the overall economy. For example, if the FOMC decides to raise interest rates, it will become more expensive to borrow money, affecting everything from mortgages to credit card payments. Conclusion: The Federal Reserve System is a complex organization that plays a critical role in the U.S. economy. Its structure is designed to ensure checks and balances across its three branches so that no one entity has too much power. While the Board of Governors sets policy and oversees the entire system, the Federal Reserve Banks carry out those policies and provide essential services to the financial system. The FOMC, on the other hand, is responsible for setting monetary policy, affecting the interest rates that impact our daily lives. Understanding the Federal Reserve System is essential for anyone wanting to understand the U.S. economy. Knowing how the Fed operates can help individuals and businesses make informed decisions about their finances. With this knowledge, you can better navigate the ups and downs of the economy and protect your hard-earned money. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
6
NZD/USD unchanged ahead of New Zealand retail salesThe New Zealand dollar is coming off a strong week, with gains of 1.36%. In Monday's North American session, NZD is unchanged, trading at 0.6274. New Zealand releases retail sales on Tuesday. The central bank's tightening has hampered consumer spending and the markets are bracing for a decline in retail sales for the first quarter. Headline retail sales are expected at -0.4%, after -0.6% in Q4 2022. The core rate is projected to decline by 0.6%, following -1.6% in Q4. The retail sales report will be followed by the Reserve Bank of New Zealand's rate decision on Wednesday. The markets have priced in a modest 25-basis point hike, which would be the smallest increase since February 2022, when the central bank raised rates from 0.75% to 1.00%. The central bank has not been shy about tightening, with the benchmark cash rate currently at 5.25%. Inflation in March from 7.2% to 6.7% on an annualized basis, more than double the upper range of the 1-3% target. The RBNZ is unlikely to wind up the current rate-tightening cycle before inflation drops substantially. There was some positive news earlier in the month, as inflation expectations eased in the first quarter to 2.79%, down from 3.30% in the previous quarter. This may have cemented a 25-bp hike on Wednesday, as the central bank pays close attention to inflation expectations, which if embedded can lead to higher inflation. Fed Chair Jerome Powell said on Friday that the banking sector turmoil could mean that the Fed will not have to raise rates "as much as it would have otherwise". Powell reiterated that inflation remained too high and future rate decisions would depend on data. The takeaway from Powell's remarks is that we could be close to the end of the current rate-hike cycle, but inflation will have to cooperate and move lower to the 2% target. NZD/USD is putting pressure on support at 0.6256. Below, there is support at 0.6207 0.6326 and 0.6375 are the next resistance lines
by OANDA
1
USD/CAD - Will retail sales weigh on the Canadian dollar?The Canadian dollar is trading quietly ahead of a key retail sales report later today. USD/CAD is trading in Europe at 1.3484, down 0.13%. The Canadian consumer is holding tightly to their wallet, which is not all that surprising in the current economic climate. Inflation ticked higher in April, rising from 4.3% to 4.4%. Add in high interest rates and it's not hard to sympathize with consumers who are struggling with the cost of living. The April retail sales report may show that things are getting worse - headline retail sales is expected to slow to -1.4%, down from -0.2% in March, and the core rate is expected to fall from -0.7% to -0.8%. Not exactly a winning recipe for economic growth. A decline in today's report could unnerve investors and send the Canadian dollar lower. The Bank of Canada will not be pleased with the slight increase in inflation, although the core rate, which is a more reliable gauge of inflation trends, did move lower. The BoC meets next on June 7th and there is only one more tier-1 release before the meeting, that being GDP. If retail sales contracts for a second straight month as expected, there will be more support for the BoC to continue to hold rates at 4.50%, where they have been pegged since March. It's a bare economic calendar in the US today, with no data releases. The markets will have a chance to focus on Fedspeak, with Jerome Powell and two FOMC members delivering public remarks. Just a few weeks ago, the markets had priced in a pause at the June meeting at over 90%. That has changed to a 66% chance of a pause and a 33% chance of a hike of 25 basis points, according to CME's FedWatch. That downward revision is due to a consistently hawkish message from the Fed and a solid US economy. USD/CAD is testing support at 1.3479. Below, there is support at 1.3394 1.3644 and 1.3729 are the next resistance lines
by OANDA
DXY Weekly Forecast | 15th May 2023Fundamental Backdrop Core Retail Sales m/m expected to improve from -0.8% to 0.5% Consumer spending will increase significantly, indicating improved economic activity Unemployment Claims data could be better than expected due to positive CPI and PPI data released last week Friday could be more volatile due to Fed Chair Powell's speech Powell expected to address rising market concern about US debt ceiling Technical Confluences Near term resistance at 102.800 Next resistance at 103.500 Idea With the DXY expected the strengthen in the short term, we could see price head towards the 103.500 level. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYLong
by OlympusLab
EUR/USD edges lower, ECB expected to raise ratesEUR/USD is trading quietly on Thursday, ahead of the ECB decision later today. All eyes are the ECB, which is expected to raise rates at today's meeting. The burning question remains will the central bank increase rates by 25 or 50 basis points? The eurozone April inflation report, published Tuesday, didn't provide any insights as both the headline and core readings barely moved and were very close to the estimates. Headline CPI came in at 7.0% and the core rate at 5.6%, which is well above the 2% target and much too high for the ECB. The Bank has been aggressive in its rate-tightening cycle and raised rates by 50 bp in March. Another 50-bp increase would help in the fight against inflation but also raise the likelihood of a recession due to the economy slowing down too abruptly. The markets are leaning closer to a 25-bp hike (80% probability) over a 50-bp increase (20% probability). The Federal Reserve raised rates by 25 bp on Wednesday, to the surprise of no one. Investors were more interested in what is coming next, and Jerome Powell did hint that this hike would be the final one after 10 straight rate hikes. The rate statement was somewhat dovish, with the Fed removing the phrase "some additional" rate hikes might be needed. It changed the language that said that it would examine various factors in "determining the extent" that further hikes would be needed. Powell sounded more hawkish in the press conference, saying that higher interest rates had not sufficiently slowed down the economy, the labour market or inflation. Just to be crystal clear, Powell said that “inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go". A rate cut, anyone? Powell said in his remarks that the inflation outlook does not support a rate cut. The markets disagree and have priced in an 81% rate cut in September (51% chance of 25-bp cut and 30% of 50-bp cut). Inflation is on its way down, but the pace of the deceleration could well determine if the Fed trims rates before the end of the year. EUR/USD tested resistance at 1.1088 earlier. The next resistance line is 1.1157 1.1025 and 1.0956 are providing support
by OANDA
Has The U.S. Dollar DXY Peaked In 2023?After steadily climbing throughout 2021, the DXY saw a solid start to 2022. The US Dollar Index rallied from a low point of 94.63 in mid-January to a 20-year high of just over 114 in late September. DXY has experienced a significant drop since the publication of cooler-than-expected inflation data. Expectations of slower rate hikes from the Fed, and a lower potential terminal rate for US interest rates, have resulted in a repositioned dollar. I believe the USD will weaken further in 2023, as its significant overvaluation (based on the real effective exchange rate (REER)) can no longer be supported, once the Fed stops hiking, global growth shows signs of toughing and market volatility comes down. Technically, the dollar index DXY on the monthly timeframe closed below the 21-EMA for the first time since Aug. 2021, below the critical resistance represented in 102.80 level. Next downside target: 99.35 support level. (on the medium-to-long term)
TVC:DXYShort
by AlyaAkram
US Inflation Slows for Ninth Month: What's the Plan, Jay Powell?The US annual inflation rate has slowed down for the ninth month in a row, hitting 5% in March of 2023. While this is the lowest it's been since May of 2021, it's still well above the Fed's target of 2%. Investors are trying to figure out when the central bank will put the brakes on its hiking campaign to slow inflation. The March FOMC minutes (released this morning) revealed that some Federal Reserve policymakers discussed hitting the pause button on interest rate increases, following the collapse of two regional banks. However, ultimately, all policymakers decided that tackling high inflation was still the top priority. In the end, they went ahead with a rate hike, despite the potential risks Complicating matters, core CPI (which excludes food and energy components) has gone up to 5.6%, after rising by 5.5% in February. This has led some people to believe that more tightening is in the cards. Initially, money markets thought that the Fed might not raise interest rates in May, but expectations have since risen to 70.5%. The Dollar index remains at its lowest since February 2nd, steady near 101.5. As for Canada, things are looking up - the Bank of Canada has left its key overnight interest rate on hold at 4.50% as expected, while curbing language warning of a potential recession. The Canadian dollar has responded positively, inching up to around 1.34 per USD. Meanwhile, the British pound has risen towards $1.25, nearing a ten-month high of $1.2525 that was touched on April 4. Bank of England Governor Andrew Bailey has stated that he doesn't see any signs of a repeat of the 2007/8 global financial crisis, which is reassuring news for investors. They're betting that the Bank of England will continue to raise interest rates to combat inflation, adding some fuel to the GBP.
TVC:DXY
by BlackBull_Markets
#BOND crisis to fuel monetary expansion The Fed is damned by inflation if they print, damned by bank runs if they dont print. And with recession on the way, history shows we could plumb to new lows if the Fed only prints enough to backstop banks and pensions. Early 2000s and early 1930s were two such cases where the Fed aggressively lowered rates for well over 18 months but markets continued to trend lower anyway. But 2008 ushered in central bank quantitative easing, so with QE at the Fed's disposal, it is more likely the growth of M2 will accelerate which will keep inflation stubbornly high if not higher. A new factor that wasn't present before is that we have increasing M2 from China and Japan which has been a large driver of the market bounce we've seen in stocks and crypto since the start of the year. The 2-yr and 10-yr rates are heading lower in a hurry. CME Fed futures currently predicts one more 25 bps hike to a terminal rate of 500-525 then three consecutive drops of 25 bps. Higher inflation would become the standard as the Fed would be forced to accept a higher inflation target well above 2% which Ray Dalio had predicted in one of his published pieces.
FRED:WALCL
by BallaJi
US100 awaiting POWEL speechThe calm before the storm Meanwhile, the market is waiting for what the heck he's going to say, a gold spot for trading has been created. No matter what Powell states, the price will move in one direction or another. Enjoy trading safely. Use always SL Don't bet more than 1% of your balance. Your money is finite, but the chances of making millions are Billions. Note: the trades are triggered once the price crosses the channel boundaries, thru pending orders. This is not a financial adv!
FX:NAS100
by Mat_cl
Is the DXY in trouble!?? Before we start all views are my own and are based from my overall personal research. As we have covered in previous markups and breakdowns we are taking our major lows on the larger timeframes on the DXY. Here we have a pretty simply markup here for DXY iam only looking at this for a short term idea overall i strongly believe we are set for some serious downside on the USD and with this iam waiting for a true shift to show itself... As many countries begin to decouple from the USD and the fed continues pushing the price to unsustainable levels with consistent printing of new currency we are watching history unfold in front of our eyes... Taking a deeper look into the history & future of the USD. The control and power that the US has had in the past is drastically dwindling... if you follow the power trial to its source it will and always has lead us back to the federal reserve. Now the above is an issue for many different reasons... the main reason being no country or persons should be governed or controlled by a bank or reserve, which for a long time has been the case... this leading to countries having economic collapses along with huge depts placed on them in times of crisis, when this happens to a country it 90% of the time means one side is gaining while the other is losing. due to this we are and will continue to see more countries disconnect and distance themselves from the USD. Once we get to our tipping point where the USD has truly lost its grip on the global economy it will be to late to revert from its course, which i believe will take us to lows we've not seen in decades, ultimately leading to the collapse of the USD... Now iam no economist nor a financial expert, but I urge everyone that reads this to do your own research to the state of the USD and how the fed is "dealing" with the matter. To sum up, iam looking for prices to drop below 100 on the DXY in the coming months and possibly even weeks... Whatever the outcome trader stay safe and stick to your plan!
TVC:DXYShort
by PipSurfingSociety
Great down day for $SPY (+25% return)Shorted $AAPL at close to yesterday's high ($155-156) for a close to 25%+ gain with SPY being down -1.53% today. What comes next? 1/ TESTIMONY DAY 1 $DXY ripped through the supply zone during Powell's testimony. $SPY bulls will want to see DXY make it back in the zone for SPY to move 401+ which has acted as near-term resistance (anything goes when it comes to Powell). 2/ POSITIONING UPDATE Still holding my swing position for $AAPL (see previous linked idea). I expect more drawdown before I consider trimming,
AMEX:SPY
by theapearmy