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Analysts at TD Securities point out that the economic calendar this week will see US data including GDP and core PCE, along with European inflation data later in the week, but the main event will be the FOMC’s rate decision on Wednesday.

Key Quotes

“The Fed will likely increase interest rates by 25bp for the third time this year.”

“While this hike is already well priced in precious metal markets, the driver will come from potential changes in the dot plot and the press conference. With an additional voter this month, there is a possibility that the Fed’s dots for 2019, the first estimate for 2021 and for the long term could be revised downwards. Our macro team cites a drift lower in the longer term dot as their base case. This, and a potential to shift to two hikes rather than three in 2019 would suggest the Fed hiking cycle is nearing an end, which would ultimately provide a boost to precious metals.”

“On the other hand, any drift higher in the dots or talk of a need to hike above neutral are where the potential hawkish risks lie. However, given the recent USD strength throughout the summer and current speculative positioning, a dovish surprise should induce a larger market reaction relative to a hawkish one.”