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Currency Market Analysis

Sep 26, 2018 | Currency Market Analysis

Global Themes

Greenback slips ahead of US Fed meeting

The USD was mostly lower overnight although market moves were muted ahead of tomorrow morning’s US Federal Reserve decision.

The US Fed is widely expected to raise rates tomorrow – market pricing suggests a move is almost certain – with the main focus likely to be on the Fed’s updated forecasts.

Euro gains

The euro continued to climb after Monday’s night’s speech from European Central Bank president Mario Draghi signalled the ECB was more positive on the European economy.

The British pound climbed as the UK’s Brexit turmoil continued to create volatility. The GBP rebounded from heavy losses seen last week.

The NZD dropped ahead of tomorrow morning’s Reserve Bank of New Zealand meeting.

Forecast

The focus for markets over the next 24 hours will be clearly on the US Federal Reserve meeting at 2.00am.

The Fed is likely to raise rates to a new band between 2.00% and 2.25%.

The market will be looking to the Fed’s forecasts with an eye to the likely end point of the Fed’s rate hiking cycle.

The Fed’s most recent forecasts indicated the US central bank was likely to stop raising rates once the official Fed Funds Rate neared 3.50%. Any lift in these forecasts can lift the US dollar.


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