Talking Points:
- The Fed has hiked interest rates three times this year and is favored to hike again at the next meeting
- The meeting will be accompanied by a quarterly report from Chairman Powell and a press conference
- Dollar movement was tempered as the decision met market expectations
The Federal Open Market Committee decided not to change the Fed Funds rate range Thursday, a decision widely expected by investors. Consequently, the Dollar enjoyed little price movement. In the accompanying policy statement, Fed officials continued to express a plan to normalize rates as they see reason for “further gradual increases.” Similarly, officials again expressed the view that “risks to the economy remain equally balanced.”
One notable revision in the policy statement was an alteration to the Fed’s view of fixed business investment growth. In the previous statement, they found the sector to be “growing strongly.” In Thursday’s report, language regarding fixed business investment was revised to “has moderated from its rapid pace earlier in the year.”
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While this month’s decision may have been devoid of significant reaction, Thursday’s meeting is the final meeting on the calendar for 2018 that is not accompanied by a live event. Thus December’s rate decision, quarterly projections, and subsequent press conference will likely have a much larger market reaction.
As of Thursday, CME Fed Futures have the probability of a 25 basis point hike come the next decision at 75%.
Source: CME FedWatch Tool
Once we tick into the New Year, every FOMC decision will be followed by a press conference. The change was announced in June as Chairman Powell seeks to provide further clarity regarding the Fed’s thought process.
US Dollar Basket (DXY) Price Chart Hourly, November 5th – 8th
Leading up to the event, the Dollar basket was in a holding pattern and rested near trend-line support above the 96.0 level. After the announcement, little was changed from a price perspective and the fundamental landscape remains the same.
View other key economic data and events on our Economic Calendar.
The next significant domestic data figure that could impact the Dollar is next Wednesday’s CPI release. Until then, the Dollar will likely be driven by real-time news developments and data releases from other countries like the UK’s GDP data due tomorrow.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
Read more: US Dollar Trend-Line Bounce Vulnerable Ahead of FOMC
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