FXStreet reports that in the opinion of economists at ING, Fed Chair Jerome Powell could signal a tapering coming later this year.

“After weak jobs data and a slight decrease in inflation in August, we expect to see no changes in the Fed’s policy stance this week. Still, we think there will be a certain degree of acknowledgement that the current level of monetary accommodation may no longer be warranted and that asset purchases may start to be unwound by year-end. Such a tone on tapering may not generate much surprise in the market.” 

“Markets may be sensitive to any signals about the timing of monetary tightening. It is quite a close call, but we do not expect the Median Dot Plot for the first rate hike to shift from 2023 to 2022. In FX, this should translate into a weaker dollar after the FOMC announcement, with pro-cyclical currencies reaping most benefits.”