The Federal Reserve convenes and is set to raise interest rates. But what comes afterward? The team at Bank of America Merrill Lynch weighs in:
Here is their view, courtesy of eFXnews:
Fed speakers have already sent a strong signal that the Fed intends to hike this week, notes Bank of America Merrill Lynch FX Strategy.
“With the rate decision likely to be a nonevent, attention turns to the Summary of Economic Projections and the press conference at this week’s FOMC meeting,” BofAML adds.
In this regard, BofAML believes that the combination of a shift higher in the dots and language changes in the statement will send a hawkish signal, but suspects that Chair Yellen will sound more balanced in her press conference.
As such, BofA argues that depending on how hawkish the Fed sounds this week, ‘there is room for repricing in rates and further strengthening in the USD.’
USD is trading at 1.0654 vs EUR and at 114.81 vs JPY as of writing.
