The economists of Rabobank analyze the outlook for the dollar ahead of today’s Fed meeting.
The Dollar may find support as risk appetite declines
The resilience of the US economy and the assumption that the Fed will maintain a hawkish stance at today’s meeting of the Federal Open Market Committee (FOMC) should ensure a well-supported dollar.
The FOMC dot chart is likely to show one more rate hike this year as policymakers keep the door open for further tightening. On the basis that US rates are near their peak, the Fed, like the Bank of England and most other G-10 central banks, is likely to lean towards the rates mantra ” higher for longer” in its interest rate policy. This will create a firm profile in market rates, which is necessary in the fight against inflationary pressures.
The dollar will also be supported by lower risk appetite linked to slowing growth in China and Europe. In our opinion, Dollar likely to remain well supported until Fed rate cuts occur. This suggests a firm profile for the USD heading into next year.
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.
