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Fed: Anything less than 75 basis points would be very negative for the dollar – Credit Suisse

Today the Federal Reserve is expected to increase your interest rate by 75 basis points (bp). Anything other than this result would be very negative for the dollarreport economists at Credit Suisse.

The more reasons the Fed exposes as possible reasons to stop the rate hike, the worse it will be for the dollar

“The market already expects a rate increase of 75 basis pointsso anything that strays from that outcome would be a huge disservice to the dollar.”

“Even if you offer 75 basis points, the more variables the Fed puts on the table as worthy of concern (for example, international conditions) and the more reasons the Fed exposes as possible reasons to stop rate hikes, the worse it will be for the dollar. In the extreme case, we can see this leading to a retest of the October highs in the EUR/USD close to 1.0100, although we would anticipate the move to level off given the looming risk of Friday’s employment-related data. “

“A positive FOMC surprise for the USD would require the Fed to send a message that it is totally focused on controlling the current high inflation and sees no benefit in slowing its rate of hikes. In this scenario, we can imagine that the EUR/USD is heading for 0.9750with a drop beyond that level contained by the proximity of Friday’s October employment data.”

Source: Fx Street

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