MUFG Bank economists continue to question the logic of a “jump” scenario by the FOMC and discuss the implications for the US dollar.
It will likely ultimately be considered a pause rather than a “jump”
Of course, a dot chart rally in 2023 and/or 2024 coupled with hawkish communication tonight will potentially offset any easing in financial conditions and could see the USD strengthen. But beyond the short-term reaction, the question is whether the strength of the dollar and the rise in rates will continue. We see it unlikely. After all, a pause is a pause and is likely to ultimately be considered a pause and not a “jump” since incoming data is likely to continue to justify the end of this hardening cycle.
We think the Fed will pause this afternoon, even if Powell tries to convince us otherwise. Ultimately, it will make an important point for trigger US dollar weakness.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
