Fed: Neutral statement needed to keep the USD on the defensive – Scotiabank

USD remains soft as markets anticipate Fed pause. Economists at Scotiabank analyze greenback outlook ahead of FOMC.

Other major central banks are clearly still in tightening mode

A holding statement is likely in some form today, leaving the door open for more tightening but perhaps without being too specific about the outlook. 

Despite the soft tone in the USD today, markets seem to be betting on a ‘hawkish hold’ tone to the statement, etc. But the Fed might not want to be too clear in defining the outlook at this stage and something a bit more neutral overall at least will be needed to keep the USD on the defensive, considering that other major central banks are clearly still in tightening mode. 

See – FOMC Preview: Banks expect the Fed to take a break, but signal higher rates ahead