Dollar Steadies as Markets Await Fed Tonight, 0.25% Rate Hike Expected

MacroDigital Finance Impact 4
โดย InfoQuest·US·Read original
Summary · why it matters

The dollar index traded in a narrow range ahead of the release of the US Federal Reserve's monetary policy meeting results tonight. As of 10:47 p.m. Thailand time, the dollar index was up 0.08% at 99.693, while the dollar rose 0.03% to 1.154 against the euro and weakened 0.07% to 154.97 yen. Markets are watching the meeting outcome, as well as remarks from Fed Chair Kevin Warsh, the policy rate projections known as the Dot Plot, and US economic forecasts including gross domestic product, the unemployment rate and the inflation rate. Most recently, the FedWatch Tool from CME Group indicated that investors assign a 92.7% probability that the Fed will raise interest rates by 0.25% to a range of 3.75-4% at today's meeting, and a 7.3% probability that the Fed will hold rates steady. If the Fed raises rates as expected today, it would be the first hike since July 2023, and since then the Fed has cut rates six times by a total of 1.75%. A month ago, investors assigned only a 36% probability that the Fed would raise rates at the September 16 meeting, as the market expected inflation figures to ease. However, after Kevin Warsh delivered a speech at the Fed's annual conference in Jackson Hole that pointed to tighter monetary policy, market expectations about the Fed's rate path began to shift. Meanwhile, economists at Morgan Stanley said the firm has changed its forecast from expecting no rate hikes this year to expecting two hikes, one on September 16 and another in December. Michael Gapen, chief economist at Morgan Stanley, said the most important reason is that the slowdown in inflation is still not happening fast enough to give the Fed confidence that inflation will return to 2%. Brent Wilsey, chief investment officer of Wilsey Asset Management, said that if the Fed holds rates steady today, it could surprise the stock market and could damage the Fed's credibility. Jonathan Pryor, co-head of foreign exchange trading at Marex, said the Fed is entering a new phase of monetary policy.

Impact on stocks 4

Financials▲ · 1 stocks
Morgan Stanley
MS
± MixedMonetaryrelevance

Morgan Stanley economists changed their forecast to two hikes this year (September and December), a rate-path call rather than a company-specific event.

Carbon Removal (DAC)▲ · 1 stocks
CME Group Inc
CME
▲ PositiveDemandrelevance

CME's FedWatch Tool is cited as the market gauge for the 92.7% probability of a 0.25% hike, highlighting demand for its rate-futures products.

Others▲ · 2 stocks
％Effective Federal Funds Rate
EFFR
▲ PositiveMonetaryrelevance

Markets assign a 92.7% probability the Fed raises rates 0.25% to 3.75-4%, pushing the effective federal funds rate yield up.

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