Economists at TD Securities discuss the Federal Reserve Interest Rate Decision and its implications for the Bloomberg Dollar Spot Index.
More hawkish (20%)
Fed delivers a pause while also strongly hinting at the possibility of an additional rate increase before year-end. Chair Jerome Powell emphasizes the strong rebound in output in Q3, while also downplaying the upcoming shocks to the economy in Q4, judging them as temporary. BDXY +0.20%.
Base case (70%)
Fed delivers another hawkish pause after staying on hold in September, with the Committee leaving the door open for an additional rate increase. That said, the FOMC will repeat that it aims to ‘proceed carefully’ as it formulates the next steps for policy, also highlighting its increased data dependence. We expect Chair Powell to underscore that while macro data since the Sep meeting has turned out unambiguously firm, the Fed can afford to be patient as it gathers more data. BDXY +0.10%.
Dovish (10%)
Fed pauses but signals less need for further rate hikes given the recent tightening of financial conditions (and downplays the Sep dot plot). Powell mentions that the best course is to be patient given the totality of policy tightening still in the pipeline, the ongoing reduction of credit supply, and the upcoming shocks that will dent output in Q4. BDXY -0.50%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD clings to recovery gains near 0.6550 on weaker USD, upbeat mood
AUD/USD holds sizeable gains near 0.6550 in the Asian session on Monday. A sharp pullback in the US bond yields prompts some US Dollar profit-taking after US President-elect Trump named Scott Bessent as Treasury Chief. Moreover, the upbeat market mood supports the risk-sensitive Aussie.
Japanese Yen builds on its weekly bullish gap-up against USD
The Japanese Yen (JPY) strengthens against its American counterpart at the start of a new week, dragging the USD/JPY pair back below the 154.00 mark during the Asian session. The US Treasury bond yields fell sharply in reaction to Scott Bessent's nomination as US Treasury Secretary.
Gold: Is the tide turning in favor of XAU/USD sellers?
After witnessing intense volatility in Monday's opening hour, Gold's price is licking its wounds near $2,700. The bright metal enjoyed good two-way trades before sellers returned to the game after five straight days.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.