Browsing: Daily Look

The Federal Reserve is set to leave rates unchanged and publish new forecasts. How will the market move?

Here is their view, courtesy of eFXdata:

Bank of America Global Research discusses its expectations around tomorrow’s FOMC policy meeting.

We expect the Fed to keep rates unchanged at 1.50-1.75% at the December meeting and guide towards a hold in policy. The dots should shift lower by 25bps and show a pause in 2020. The statement likely flags that policy “remains appropriate“,”BofA notes.

“Given key upcoming policy events, we doubt the FX market will react much to a December FOMC meeting outcome. Rather, we expect FX price action will likely continue taking cues from UK election/Brexit risks as well as US-China trade policy developments, clarity on which we should have as the week draws to conclusion.

Accordingly, we think the hurdle for a significant USD reaction on Wednesday is fairly high, though we agree with our colleagues on the rates strategy side that risks seem somewhat episodically skewed toward a hawkish market reaction and accompanying USD strength given the markets dovish view of the Fed in 2020,” BofA adds. 

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