FED PREVIEW: USD COULD GET A BOOST ON ANOTHER HIKE SIGNALED IN THE “DOT PLOT” – CRÉDIT AGRICOLE
Today's main event will be the FOMC meeting. Economists at Crédit Agricole expect the Fed to pause its rate hikes but the Dollar could still benefit if the “dot plot” signals another hike.
Slowing US economy and inflation
We suspect the Fed’s updated 'dot plot' will signal another rate hike this year, which could boost the USD, especially if it comes alongside new forward guidance.
Our view is that the Fed’s tightening cycle reached its peak in July and that a protracted pause is on the horizon due to the slowing US economy and moderating inflation.
Despite the expectation of a pause in the tightening cycle, we do not necessarily see this as a reason to be bearish on the USD
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