It’s Federal Open Market Committee (FOMC) day and a 25 basis point rate cut – which would take the interest rate target to 3.50-3.75% – is set at around 90%. The big focus will be on the Summary of Economic Expectations (SEP), the number of opponents against the 25 basis point cut, and then Chairman Powell’s press conference, notes ING FX analyst Chris Turner.
The dollar may rise to 99.60 in light of the strict devaluation
“There is a risk of as many as four Fed defectors, versus one in October, and the Fed is likely to retain just one rate cut in 2026 in September. This compares to nearly two additional rate cuts that markets have set for 2026. There will also be a focus on growth and unemployment rate expectations, which in September stood at: GDP 1.8% (26th), 1.9% (27th), 1.8% (28th) and unemployment at 4.4% (26th), 4.3% (27th), GDP is at risk of revising higher, while expectations for the unemployment rate could rise.
“In October, Powell’s press conference sent the dollar sharply higher. These risks should remain today as he discusses opposition to the decision and the fact that three consecutive rate cuts have brought the interest rate much closer to neutral. Pricing for a second rate cut in 2026 is clearly at risk today and comes during a week in which investors are hawkishly reevaluating global central bank policy.”
“The DXY could trade up to 99.60 today amid a hardening downgrade, but the release of what should be soft jobs data next week and seasonal weakness in December suggest today’s dollar rally may not last.”
