The meeting of the Federal Reserve this month and the release of its minutes and policy statement is such a big event that we are going to see the influence of this not only in the fixed income space, but also in the currency and equity markets. Basically, everything is going to see the effect of the Federal Reserve’s monetary policy decision.  Even if the Fed keeps economic policy stable, as expected, traders of all assets will be looking deeply into the Fed's words as a way to understand where policy is headed and what we can expect from the economy in the short term.  The main focus among the market players will be the Fed dot plot. Last time, we saw a split of 11 to 7 among the policy members to hike the interest rate in 2023, but now, it is broadly anticipated that the forecast may shift to tighten the monetary policy next year. The move in the dollar index is going to be dependent on two events, first it will be the dot plot projections and second the press conference. If the fed acknowledges, that the economic recovery exceeds current anticipations, we could see a strong rally in the dollar index and vice versa.Â
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