Today marks the start of the two-day meeting in Washington DC in which the Federal Reserve will decide upon the September interest rate decision at the bank. It doesn’t even really appear as though there are many decisions to be made here, as markets have carried an expectation for a 25 basis point rate hike for some time. What is perhaps up to greater debate, however, is December and whether or not the Fed can get in a fourth rate hike in 2018. But – there is time for that decision, and the big question as we go into tomorrow is how strongly the Fed may signal future interest rate hikes, how close we are to the neutral rate, and whether-or-not the bank is confident enough in the current economic backdrop to continue their pace of gradual tightening into 2019.
Tomorrow will bring a dot plot matrix as part of an updated set of projections and this, combined with what Mr. Jerome Powell says during the accompanying press conference, will likely be the key drivers around the US Dollar for tomorrow’s meeting.
The US Dollar continues to struggle as FOMC kicks off; and with just a few days left until the end of the quarter, it looks like this three-month-period will finish with a loss for the Greenback as we opened the quarter at 94.63. This comes after an aggressive rally in April and May, with bullish enthusiasm holding for the first-half of Q3. But, at the quarter’s mid-point on August 15th, the music suddenly stopped, bears took over – and have largely been in-control ever since.
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