Dot dot dot
With the Federal Reserve’s interest rate decision looming large tomorrow, there is a significant risk that the Fed will fail to communicate sufficiently. Recently Powell and his fellow US rate setters have been reluctant to commit verbally to how they see the outlook for near term interest rates. Simultaneously, they have also been dissuading the market from reading too much into the closely watched ‘dot-plot’. Therefore, it could be time for the Chair to start talking and stop the dots from driving the show.
There is a near unanimous expectation for the Fed to keep rates on hold tomorrow. Observing market pricing and analysis, it would be remarkable for the Fed to take any action. If the Reserve still provides no clarity on its expected rate normalisation path, the market will have to navigate further economic uncertainty. Meanwhile, the looming threat of workers’ strikes and a potential government shut down will compound economic uncertainty with supply side and fiscal concerns respectively.
As we observed last week with the ECB, short term rate expectations are still a major driver of spot pricing. It would be hard to imagine the FOMC setting out a roadmap for policy normalisation that might undermine current rate expectation. Therefore, Wednesday’s decision is unlikely to be the catalyst that pushes the Dollar back down from its current highs.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – The Hassett Trade
Charles Porter
Thu 4 Dec 2025
The Hassett Trade Not another one, I hear you say. So far this year we’ve seen bandied around the TACO trade, the Trump put, FOMO trade, the MEGA trade, surely there isn’t another to surface before year end?! Wrong. The so-called Hassett trade is that which is currently pushing the Dollar lower but coming to […]
Daily Brief – A week out
Charles Porter
Tue 2 Dec 2025
A week out Markets are now in their final few trading days ahead of a Fed blackout that will precede the Reserve’s decision next Wednesday. The US government shutdown, despite now feeling like a distant memory, continues to weigh on the Dollar and market pricing in general. In particular, as we approach the decision next […]
Daily Brief – OBR: Oops, Budget Released
Charles Porter
Thu 27 Nov 2025
OBR: Oops, Budget Released Traders who might have been out grabbing a coffee ahead of the planned publication of the UK budget yesterday afternoon would have returned to chaos. Reuters, a popular financial news agency, revealed that although not directly discoverable via a link on their website, the OBR had published its report on Chancellor […]
