MUFG Research discusses its reaction to yesterday's FOMC decision maintains a bullish USD bias over the coming weeks.
"The US rate market is now pricing in 62bps of hikes at the December FOMC meeting as it weighs up whether the Fed will deliver one final 75bps hike or step down to a 50bps hike. The updated policy statement added as well that the Fed would take into account “the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments”," MUFG notes.
"Overall, the comments signal that the Fed is shifting to plans for a slower but more extended hiking cycle. The increase in market expectations for the Fed’s terminal policy rate support our outlook for an even stronger US dollar heading into year-end," MUFG adds.