The Federal Reserve will announce its decision at 19:00 GMT. ING economists continue to think that central bank chairman Jerome Powell will try to offer a credible protest on rates and oppose easing of financial conditions. This could take pressure off the dollar, but the downside risks remain quite high for the greenback.
In need of some Powell “magic”
“Our perception is that the Fed will want to offer some sort of ‘rate protest’, essentially rolling back the recent easing of financial conditions. To do this, Powell will need to downplay the recent easing of price pressure, maintain view that the battle against inflation is yet to be won and ultimately try to re-anchor top rate expectations in the 5.00% area. This is easier said than done.”
“Although we are in favor of higher interest rates and a stronger dollar, we have to admit that the risk of steps dovish false, desired or not, is high”.
“We knew that December would be a difficult month for dollar bulls like us, and downside risks remain significant today. Even so, our base assumption is that the dollar can regain some of the lost ground as Powell deploy your magic to convey a general message hawkish and, above all, believable.”
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.
