As Wednesday’s trading session gets underway, participants will be preparing for tonight’s key announcement from the Federal Open Market Committee (FOMC). Another rate hike is on the cards and it most likely it is 75bps. However, both 50bps and 100bps are on the table.
In the context of markets, the size of today’s rate increase will not be the main point of focus. Instead, the guidance on future rate moves this year will be what creates the most amount of impact. From the greenback’s perspective, any indication that the pace of increases will significantly slowdown from here could produce some selling pressure. On the flip side, if Jay Powell maintains a hawkish tone and confirms further increases in September and October then we will likely see more bids flow into the US dollar.
The FOMC rate decision will be announced at 7 pm UK time tonight, this will be followed by a statement and press conference from Fed Chairman Jay Powell at 7.30 pm. Any clients exposed to the US dollar in the short term should be aware tonight’s events could create some significant movement and should plan accordingly.
Written by Viv Savani. 5:47am, July 27th 2022
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