Danske Research discusses its reaction to today’s FOMC policy statement.
“As expected, the Fed stayed on hold today and made no major change to the policy signals in the statement. The Fed usually does not make changes at the interim meetings without updated projections and a press conference. Notice that this was the last meeting without a press conference, as Jerome Powell has said that there will be one for every meeting from 2019…
We expect the Fed to hike at the meetings in December, March and June, when it would reach the 3%. After that, we believe it will be more stop and go depending on how the economy is doing. We expect the Fed to hike once more in the second half of 2019, i.e. a total of four hikes from now until year-end 2019. In our view, markets are pricing too dovishly,” Danske notes
“EUR/USD a tad lower on the no-surprises Fed announcement and we still look for USD strength to remain towards year-end on the carry and cyclical support the greenback is set to enjoy for some time still,” Danske adds.