The 2 day Federal Reserve meeting began yesterday despite heavy snow conditions in Washington threatening a rescheduling of the meeting, and all 17 officials were able to attend. Janet Yellen will speak at 6pm this evening to announce their Interest Rate decision which will be followed by the Monetary Policy Statement and FOMC (Federal Open Market Committee) Economic Projections.
There is a 90% chance of the FED hiking rates to 1% from the current 0.75% rate and would cause investors to flock to the safe haven currency for higher returns on their investment. The reason for this high likelihood of raising rates is due to positive US data including the latest jobs figures which were released on Friday far higher than analysts had expected.
As the chance of a hike is high, I feel this has already been priced in to the market we could see little movement on US Dollar rates, however investors will be keenly watching for hints from Janet Yellen afterwards in the Monetary Policy Statement.
With the chance of a rate hike being factored in to the current value of the Dollar, this leads us to the question – what if the FED keep rates on hold? There is still the potential that this could happen, it was only last year that 4 interest rate hikes were promised and only one came to fruition. This year three hikes have been discussed but the Dollar could weaken significantly if confidence in Yellen’s promises begins to wane, and the gains for USD sellers could be minimal compared to the potential losses should no rate hikes materialise. If you are looking to buy or sell US Dollars it would be worth getting in touch with us here at FCD so that we can help you to time your transfer for the best possible returns.
If you have a US Dollar buying or selling need, todays interest rate decision could make a transfer less or more expensive depending on the FEDs decision. Please feel free to get in touch with one of our experts on 01494 725 353 who will be happy to assist you with any currency needs.
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