FOMC Analysis Should Include Risk Trends and Possibility of a Hike
• The June 17 FOMC rate announcement (18:00 GMT) will provide a decision, statement, forecasts and presser
• It is a low probability that the Fed hikes this meeting - focusing on forecasts - but don't write it off
• A Dollar break from congestion seems assured, but traders should keep track of the broader implications
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Given the congestion both Dollar-based FX pairs and general 'risk' assets have found themselves in, traders are eager for FOMC-derived volatility. The baseline view is that we will once again have to wade into Fed translation of rhetoric and forecasts to divine the timing of an eventual move sometime in the future. However, we shouldn't write off the more unexpected scenarios. In particular, the impact that a surprise rate hike could wrought on the financial system deserves at least a plan of action. Even in the absence of an actual change to rates, there is plenty of speculative disparity to work through and thereby volatility for the Dollar and broader financial system. What should we watch for, what markets are at-risk, and what opportunities exist for different outcomes? We focus on the FOMC decision in today's Strategy Video.
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