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The US dollar has been on the back foot after the disappointing durable goods orders, that joined other underwhelming figures.  There is a growing notion in the markets that a rate hike will not come before September and many already see the Fed refraining from a rate hike this year.

But is the Fed really going to go dovish?  If the Fed  repeats the gist of the statement, the USD could make a big comeback and resume its strength.

The Fed changed its statement in December and called for “patience” on raising the rates.  Yellen also said that a hike will not happen in the next two meetings (January and March) but that rates will rise in 2015.

Since then, not only durable goods orders disappointed but also other figures such as retail sales. Also wage growth has been disappointing and  oil prices weigh on inflation.

But when the members meet, they have two mandates:  employment and inflation. The US created nearly 3 million net jobs in 2014 and this is very encouraging. Full employment seems to be at hand.

And what about inflation? The Fed sees through falling oil prices, which Yellen certainly sees falling oil prices as positive, and sees very solid core inflation with no signs of any coming fall.

On this background, we could see the Fed reiterate the statement and  let markets understand that a rate hike is coming in 2015 and yes, a June hike is certainly on the cards.

Opinion:  USD Super Cycle Intact; Sell EUR/USD Rebounds targeting 1.09 – Morgan Stanley

The FOMC is set to release its rate statement at 19:00 GMT. Valeria Bednarik and I will begin a live video coverage at 18:45 GMT. You can see it here:

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