USD at Lowest Level since November

Since December and the last rate hike, the Dollar Index has continued going down in the face of increasing domestic and international risks. Yesterday, the FOMC decided to keep interest rates unchanged, the Fed Funds rate staying in a range of 0.5% to 0.75%. This unanimous decision was expected from investors, who anticipated a 38% chance of a rate hike in March before the FOMC meeting. After the minutes were released, the odds of a rate hike in May increased to 52%, and to 75% for June.

GBP/USD Is Moving within Range

Important events and statistics have been influencing the Sterling this week, resulting in a trading range. 

Firstly, Britain’s ambassador to the EU, Sir Ivan Rogers, decided to resign unexpectedly from his post, which could derail the fragile BREXIT process, leaving investors concerned. On the other hand, positive reports from Manufacturing PMI and UK Construction PMI have been released, putting upward pressure on the Pound.

3 Rate Hikes In 2017?

 

Yesterday, the FED announced that its key interest rate (Fed Funds) increased by a quarter of a point, within a range of 0.50% to 0.75%. FED members also said that they were expecting to raise rates 3 times next year, an increase of 1 from their last estimate. This clearly indicates that the American Central Bank wants to accelerate the pace of monetary normalization in 2017 and 2018, after nearly 10 years of an ultra-accommodative monetary policy.

Is a 3 rate hike projection for 2017 realistic, after the ongoing disagreements between the FED members in 2016? Will the future economic policy of Donald Trump influence FOMC choices?

Gold prices under pressure with the FED meeting

Gold reached its lowest level since the beginning of the year this week, as the FOMC meets today for its final meeting of the year. Markets are pricing in a hike rate – the 1^st since December 2015 – which put commodities under pressure, as the USD continues to strengthen.

Is The FED Ready To Increase Its Key Rate In December ?

Unsurprisingly, the American Federal Reserve (FED) didn’t change its monetary policy and left its key rate (Fed Funds) in the following range of 0.25% – 0.50%. This decision was highly anticipated by market participants, who expect a FED action at the next meeting on the 13^th-14^th of December – last meeting of the year.

Although politics was not mentioned during the FED meeting, and that it is politically independent, remember that the American people will elect its 45^th president in just a week.