Fed rate hike wouldn’t have much implication for the currency market - BNZ

Jason Wong, Currency Strategist at BNZ, suggests that the US FOMC Statement on Thursday morning with a new set of forecasts is the headline act and a Fed rate hike is now well-priced by the market and itself wouldn’t have much implication for the currency market, with the USD recovering since Dudley gave the nod a couple of weeks ago.

Key Quotes

“More crucial is the FOMC’s “dot plot” which, in December, showed 3 projected rate hikes for 2017, 2018 and 2019. The market’s working assumption is that this will not change. If the Fed added in another rate hike or two to the projection, then that would be USD-positive. A broadly unchanged set of projections alongside a rate hike should not see the USD make further ground. Indeed, in that case the USD could meet resistance, although the tone of Chain Yellen’s press conference will be an important guide.”