News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • The US Dollar continues to push higher against ASEAN currencies after the FOMC rate decision. This leaves the USD/SGD, USD/THB, USD/PHP and USD/IDR outlook mostly tilted higher. Get your market update from @ddubrovskyFX here:
  • The US Dollar seems to be back on the offensive against its major counterparts, pressuring EUR/USD and NZD/USD lower as USD/JPY consolidates. USD/CHF surges past key resistance. Get your market update from @ddubrovskyFX here:
  • The Japanese Yen remains in focus with strength potential on risk aversion themes to go along with weakness on themes around higher rates. Get your weekly $JPY technical forecast from @JStanleyFX here:
  • Google finance-related search interest in 'Evergrande' has almost overtaken 'Covid'. 'Taper' doesn't even register on the scale
  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:
  • Gold remains higher despite positive Evergrande news out of China. Meanwhile, copper bulls are pushing prices upward as the potential for a housing crisis in China ebbs. Get your market update from @FxWestwater here:
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here:
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here:
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:
Preview for December FOMC Meeting as USD Holds Near 13-year Highs

Preview for December FOMC Meeting as USD Holds Near 13-year Highs

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Markets have been quick to price in Fed hawkishness in the interim period since the last major FOMC meeting (with new SEPs) in September.

- US Dollar (via DXY Index) holding near 13-year highs, but further expectations curve steepening will be required to boost the greenback further.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

The December FOMC meeting seems merely procedural at this point. The Federal Reserve will hike its main rate to 0.50-0.75%, citing further tightness in the labor market and signs that inflation should rebound in 2017. The key for the US Dollar today, however, is to what degree of confidence the FOMC has in the US economy, or simply, 'how quickly does the Fed think it will be able to raise rates next?'

A quick look at Treasury rates shows how that traders are becoming more confident in the US economy. As a gauge of long-term growth and inflation expectations, the US Treasury yield curve has steepened on both the short- and long-ends over the past year (chart 1 below). The evolution of US economic data and politics over the past several months has, in investors' minds, increased the potential for tighter monetary policy in the near-term.

Chart 1: US Yield Curve (December 2015 versus Decmeber 2016)

Preview for December FOMC Meeting as USD Holds Near 13-year Highs

The evolution of the US Treasury yield curve over the past year, but particularly how quickly rates have perked up over the past few months, has seen market expectations realign with the Fed's own forecasted rate path. Whereas at the September FOMC meeting, markets were pricing in one rate hike each of the next three years, now, markets are in line with what the Fed is poised to do in 2017, but may be a bit behind the Fed in 2018.

Chart 2: Fed Dot Plot Median Path and Overnight Index Swaps

Preview for December FOMC Meeting as USD Holds Near 13-year Highs

After the past few weeks of US economic data (especially after that the US Presidential elections), markets have been quick to pricing in June 2017 and December 2017 as when the Fed will raise rates next (table 1 below).

Table 1: Fed Rate Hike Expectations Through December 2017

Preview for December FOMC Meeting as USD Holds Near 13-year Highs

Given the high expectations going into today's meeting, the FOMC will need to take on a rather hawkish stance in order to see the US Dollar rally significantly further. EUR/USD itself may be currently predisposed for lower prices (and USD/JPY for higher prices given interest rate differentials), but the FOMC meeting will only yield such a result of the Fed rate hike expectations curve steepens – a difficult scenario to envision seeing as how markets have already moved quite far already.

Read more: More Volatility Due for EUR/USD as Fed Hike Doesn’t Guarantee USD Gains

--- Written by Christopher Vecchio, Senior Currency Strategist

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.