US dollar to dip temporarily if Powell fuel doubts on tight market expectations – Commerzbank

Could the Federal Reserve meeting be negative for the dollar? Economists at Commerzbank do not expect the world's most powerful central bank decision to provide additional support to the USD.

USD unlikely to profit from Fed’s meeting 

“While new forecasts and the dot plots can provide guidance, these are unlikely to take into account recent inflation figures and the turmoil in the financial markets. This is why this debate within the FOMC, which we will only get in the minutes in three weeks’ time, would likely provide most momentum for the US dollar.”

“Fed Chair Jerome Powell will likely want to keep all options open for himself at tonight’s press conference and provide little in the way of news but will only give a well-worded ‘we will continue to hike at a rapid pace’. That in turn would not constitute any additional fuel for the dollar bulls as market expectations have already gone a long way. That is why I do not assume that today’s meeting will provide additional support to the dollar so that EUR/USD will not ease below 1.04 on a sustainable basis as a result of the rate decision.”

“If Powell were to fuel doubts in any way or form that the Fed might disappoint the tight market expectations or even slow its course the dollar might even dip temporarily.”

See – Fed Preview: Forecasts from 12 major banks, increasing bets of a 75 bps rate hike