Will a Hawkish FOMC Rekindle Panic Across Financial Markets?
- Hawkish FOMC may boost US Dollar, fuel risk aversion
- UK 4Q GDP data to inform 2016 BOE rate hike probability
- Aussie Dollar view clouded on clashing cues before CPI
The US Dollar may rise while risk aversion returns to punish higher-yielding currencies if this week's FOMC policy announcement strikes a hawkish tone, hinting recent volatility will not derail policymakers' rate hike plans.
Fourth-quarter UK GDP data will help traders gauge the possibility of a 2016 interest rate hike following hawkish comments from BOE Governor Mark Carney over the weekend.
Conflicting cues ahead of the fourth-quater Australian CPI data cloud investors' outlook. A soft print is likely to amplify RBA interest rate cut probabilities and hurt the Aussie Dollar while a firm outcome stands to deliver the opposite result.
--- Created by Ilya Spivak, Currency Strategist for DailyFX.com
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