US Dollar Rallies Ahead of a Potentially Big Day At The Fed

The Fed releases its latest interest rate decision, statement and member forecasts at 2:00 pm EDT today, followed by Chair Powell’s usual press conference at 2:30 pm. This time around the US central bank is widely expected to maintain interest rates. Investors may look to the statement and forecasts for hints on how many interest rate cuts we may expect for this year and when they may start. Any commentary or announcements related to changes in the Fed’s Quantitative Tightening program or bank support programs may also attract attention.

Back in December, FOMC members forecast 3 rate cuts for this year. Heading into today’s meeting the consensus around the street has been that could take the form of cuts in June, September and December, with nothing likely to happen at the November meeting, which is the same week as the US Presidential Election.

Equity market action has been quiet ahead of today’s Fed announcements. US index futures plus the Dax and FTSE are trading in a range between -0.2% and +0.2%. The US 10-year treasury note yield is steady near 4.28%.

The US Dollar is climbing ahead of the Fed news suggesting investors are expecting a neutral to hawkish tone and dialling back dovish expectations. The greenback is up 0.5% against the Yen and about 0.2% against the Loonie, Euro, Pound and Gold. Cryptocurrency trading is mixed following yesterday’s selloff with Bitcoin down 0.7% and Ether up 0.2%. Commodities are mixed as well today with US Crude Oil down 1.1%, Copper down 0.9%, and Natural Gas up 0.1%.

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