Today is the second day of the Federal Open Market Committee’s rate policy meeting and will culminate with the announcement of its rate policy at 2pm ET. In light of recent hotter-than-expected inflation data the Fed is expected to keep rates steady at its current target rate of 5.50%.
Fed Funds Futures imply a 0.8% probability (not quite zero chance but close enough) of a 0.25% basis-point cut at today’s meeting and only a 10.3% probability of a cut at the May 1st meeting. The year-end implied rate is 4.60%, down from the current 5.329%, suggesting almost three cuts are expected through December.
The U.S. Dollar Index has rallied 1.34% since forming a candlestick ‘hammer’ pattern on March 8th. Support is now at 102.50 and resistance at 105.00. The biggest dollar gains since the March 8th reversal are +3.09% vs. JPY, +2.38% vs. NZD, +1.60% vs. AUD, +1.28% vs. GBP, +0.88% vs. EUR and +0.78% vs. CAD.
The dollar is trending higher today vs. the G10 and most majors with some speculating that the Fed will strike a more dovish tone in today’s rate policy statement.
Gold continues to consolidate gains from its record high $2,194.99/oz from earlier in the month, -1.89% since March 8th and -0.17% today.
