FOMC

FTSE falls after hot UK inflation. USD/JPY tests the 50 sma resistance ahead of the Fed rate decision.

Today’s UK inflation print could be the difference between a final 25bp hike from the BOE tomorrow, or a pause. Then our attention turns to the FOMC meeting.

Fed fund futures (FFF) suggest an 87.1% chance of 25bp hike for today's FOMC meeting - and I agree with that part. But what about the rest of the curve?

We agree with the market’s expectation that Jerome Powell and company are likely to deliver a 25bps interest rate hike this month, though we certainly wouldn’t be shocked to see the central bank hold fire for now.

With the Fed and BoE rate decisions to come, along with some key economic data from both the UK and US, the GBP/USD has to be the currency pair of the week.

FOMC meetings are some of the most important economic policy events. The meetings provide opportunities for both day traders and longer-term traders. Learn about the impacts of FOMC meetings and how to trade them.

Whilst the Fed effectively confirmed two more 25bp hikes to are to follow, Fed fund futures remain unconvinced and are pricing in a single hike to take rates to 5%.

Today’s FOMC meeting was uneventful. However, Powell’s press conference which followed provided less hawkish comments for the markets to feast on

The December Core PCE print was in-line with expectations. Therefore, markets remain comfortable with pricing in the 98% chance of a 25bps rate hike on Wednesday.

If markets don’t care about what Powell has to say about interest rates, the next place to turn its attention to may be growth and the outlook for a possible recession in 2023!

The Fed Chairman isn’t yet willing to entertain a pause in rate hikes or the prospect of rate cuts in 2023, though he continues to emphasize the central bank’s data dependence...

Stocks are edging lower as investors look ahead to the Federal Reserve rate decision and attempt to gauge whether inflation has cooled sufficiently for the US central bank to adopt a more dovish stance.

FTSE falls despite inflation ticking lower. USD/JPY falls ahead of the Federal Reserve rate decision.

Implied volatility for FX majors has risen ahead of today’s FOMC meeting - and most notably GBP as it also has UK CPI to contend with within the hour.

While there seems to be a clear consensus that the central bank should slow its pace of rate hikes, the ultimate question for this week’s meeting will revolve around the so-called “terminal rate,” or how high the Fed will have to push interest rates next year before pausing the rate hike cycle.

Although it had an immediate impact on the markets once it was released, the PPI print alone shouldn’t have too much influence on the FOMC decision.

The risk to the CPI data is that it is much lower than expected.