It has been widely publicised that there is a strong possibility of a rate hike on Wednesday. Those hoping of a large spike in Dollar value if the rate rises maybe disappointed. The market moves on rumour as well as fact and I believe a hike is factored in to the market. If the hike occurs I would expect small gains. If the market does move on rumour, take into account forward guidance on rate hikes has proved false in the past. Three rate hikes were predicted in 2016, that did not materialise.
The big market mover would be if rates were kept on hold, then there would be the probability the Dollar would fall sharply.
Donald Trump has stated he is concerned about the value of the US dollar hurting exports. A rate hike would exasperate the problem. The Federal Reserve is however meant to act as separate entity to the government.
If you have a US dollar requirement be sure to let you broker know in advance so they can assist in timing your trade in an attempt to maximise your return.
To begin US data releases we will see Consumer Price Index (CPI) data. CPI is a key measure of inflation and has been known to move US dollar value, but on this occasion the interest rate decision will be of far more importance.
The monetary policy meeting following the rate decision should be listened to closely. It will give an indication as to future monetary policy. Janet Yellen, the Chair Lady for the Federal Reserve has been very bullish this year in regards to rate hikes. It will be very interesting to see her stance following Wednesday’s decision.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me directly at firstname.lastname@example.org.
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